TAX 42 FINALS REVIEWER

1. The transhipment of sin products inside ecozones are subject to excise tax. FALSE

2. Locally produced goods are always subject to ad valorem tax. FALSE

3. Imported excisable goods are taxable to excise tax at the point of sale. FALSE

4. Excise tax is payable at the point of sale. FALSE

5. Specific excise taxes are normally indexed to inflation at 4% per year. FALSE

6. Excise tax and VAT on importation are levied upon landed costs. FALSE

7. The transhipment of excisable goods to duty-free shops, Freeport zones and ecozones are generally

subject to excise tax. FALSE

8. Goods with unpaid excise taxes shall expose the owner of the same to the excise taxes. TRUE

9. Excise tax is imposed after consumption. FALSE

10. When exempt persons import excisable goods, the same shall not be subject to excise tax but when the

same resells the goods to non-exempt person, the buyer shall be subject to excise tax. TRUE

11. Imported excisable goods are subject to tax on landed costs. FALSE

12. Excise tax is a direct tax rather than an indirect tax. FALSE

13. The excise tax on the sale of imported goods is collectible from the first buyer of the goods. TRUE

14. Excise tax is normally imposed upon sellers of excisable goods. TRUE

15. The net retail price shall be determined by a price survey. TRUE

16. The introduction of excisable goods to the customs’ territory is subject to excise tax. TRUE

17. The excise tax on imported car shall be based on the retail price of the car. FALSE

18. To be exempt from excise tax, wines and distilled spirits must first be denatured to be unfit for human

consumption when intended to be used for processing of cigars and cigarettes. TRUE

19. An exemption from excise tax mean exemption from other business tax. FALSE

20. The excise tax on imported gold shall be based on the net retail price of the gold. FALSE

21. The excise tax imposed on mineral products is purely ad valorem. FALSE

22. All specific taxes are subject to a 4% annual rate adjustment. FALSE
23. Sincere it is merely an additional tax, excise tax is normally lower in tax rates. FALSE

24. All exports of excisable goods are exempt from excise tax. FALSE

25. All excise taxes on cigars and cigarettes are specific taxes. FALSE

26. The excise tax and VAT on importation are the same in the timing of imposition on imported goods.

TRUE

27. Just like other taxes, ad valorem taxes are not indexed to inflation. TRUE

28. Imported articles are subject to specific taxes while domestically produced articles are subject to ad

valorem taxes. FALSE

29. All taxes on petroleum products are specific taxes. TRUE

30. The timing of taxation of excise tax is the same with business taxes. FALSE

31. The excise tax on excisable goods shall be refunded or creditable only when the goods are exported as

integrated part of processed goods. TRUE

32. There is only one type of service subject to excise tax. TRUE

33. The VAT on importation is a business tax. FALSE

34. The final withholding VAT is a business tax. TRUE

35. The VAT on importation is 12% of the value added on importation. FALSE

36. The VAT on importation is 12% of the receipts from the sale of services abroad. FALSE

37. Importation is subject to either VAT or percentage tax. FALSE

38. The final withholding VAT is 12% of the contract price of purchased services from within the

Philippines. FALSE

39. The sale of services abroad is subject to 12% final withholding VAT. FALSE

40. The VAT on importation is paid to the BIR. FALSE

41. The final withholding VAT on services is paid to the BIR. TRUE

42. The importation of any agricultural or marine products is VAT exempt. FALSE

43. The importation of professional instruments and implements is exempt from VAT. TRUE

44. The importation of any product intended for human consumption is VAT exempts. FALSE
45. Importation in subject to either VAT or percentage tax. FALSE

46. The importation of professional instruments and implements in commercial quantities is VAT-exempt.

FALSE

47. The importation of equipment, machinery and spare parts for marine vessels is VAT-exempt. TRUE

48. Resident foreigners are not subject to the VAT on importation. FALSE

49. All agricultural or aquaculture inputs are VAT exempt. FALSE

50. All excise taxes are levied at the point of production or importation. FALSE

51. The sale of processed agricultural products is vatable. TRUE

52. The importation of books and newspapers is VAT-exempt. TRUE

53. The importation of life-saving equipment is VAT-exempt. FALSE

54. The lease of aircrafts or vessels from non-residents is exempt from final withholding VAT. FALSE

55. The purchase of services from foreign consultants is exempt from final withholding VAT. FALSE

56. The importation of fuel, goods, and supplies by international carriers is VAT-exempt. TRUE

57. The importation of agricultural machineries by farmers is VAT-exempt. FALSE

58. The importation of agricultural machineries by agricultural cooperatives is VAT-exempt. TRUE

59. The VAT on importation is payable only by those engaged in business. FALSE

60. The final withholding VAT on importation of services is payable even by those not engaged in business.

FALSE

61. The VAT on importation and final withholding VAT can be claimed as input VAT creditable against

output VAT. TRUE

62. In economic reality, the VAT on importation and final withholding VAT are taxes to be paid by non-

resident sellers. FALSE

63. Qualified exempt importation is exempt from VAT only if made by an exempt person. TRUE

64. Traders who import wheat shall pay advanced VAT. FALSE

65. The excise tax on imported car shall be based on the retail price of the car. TRUE

66. A VAT overpayment may be carried over in the succeeding periods. TRUE
67. Unutilized advanced VAT may be claimed as tax refund. FALSE

68. Unutilized advanced VAT may only be claimed as tax credit certificate. FALSE

69. A manufacturer of refined sugar shall pay advanced VAT before pulling out the refined sugar at the

point of production. TRUE

70. A non-VAT-registered person who transport naturally grown timber for sale shall pay advanced

percentage tax in lieu of the VAT. TRUE

71. The quarterly VAT due of the taxpayer is paid within 20 days following the end of the quarter. FALSE

72. Unutilized input VAT can be refunded upon termination of the business of the taxpayer. TRUE

73. Unclaimed advanced VAT may be claimed as tax credit. TRUE

74. Non-resident foreign corporations are not subject to final withholding tax on income. FALSE

75. The owner of naturally grown timber shall pay advanced VAT prior to its transport to buyers. TRUE

76. Millers who imports wheat shall pay advanced VAT. TRUE

77. The taxpayer supplying goods or services to ODA funded projects cannot claim credit on input VAT on

such sales. FALSE

78. The importation of sugar cane is subject to advanced input VAT. FALSE

79. Under the TRAIN law, government purchases for projects funded by the ODA shall be exempt from the

5% final withholding tax. TRUE

80. Millers of refined sugar and flour shall pay advanced VAT. TRUE

81. Advanced VAT is an input VAT. FALSE

82. The obligation of the government and GOCCs to withhold VAT is not a separate obligation from that of

the obligation to withhold income tax. FALSE

83. Traders of refined sugar and flour shall pay advanced VAT. FALSE

84. Purchases of goods are subject to 2% withholding tax while purchases of services are generally subject

to 1% withholding tax. FALSE

85. The importation of sugar cane is subject to advanced input VAT. FALSE
86. A manufacturer of refined sugar shall pay advanced VAT before pulling out the refined sugar at the

point of production. TRUE

87. The owner of naturally grown timber shall pay advanced VAT prior to its transport to buyers. TRUE

88. A non-VAT-registered person who transport naturally grown timber for sale shall pay advanced
percentage tax in lieu of the VAT. TRUE

89. Unutilized advanced VAT may only be claimed as tax credit certificate. FALSE

90. Unutilized advanced VAT may be claimed as tax refund. FALSE

91. Unutilized input VAT can be refunded upon termination of the business of the taxpayer. TRUE

92. A VAT overpayment may be carried over in the succeeding periods. TRUE

93. The quarterly VAT due of the taxpayer is paid within 20 days following the end of the quarter. FALSE

94. Under the TRAIN law, government purchases for projects funded by the ODA shall be exempt from the

5% final withholding tax. TRUE

95. Non-resident foreign corporations are not subject to final withholding tax on income. FALSE

96. The taxpayer supplying goods or services to ODA funded projects cannot claim credit on input VAT on

such sales. FALSE

97. The obligation of the government and GOCCs to withhold VAT is not a separate obligation from that of

the obligation to withhold income tax. FALSE

98. Purchases of goods are subject to 2% withholding tax while purchases of services are generally subject

to 1% withholding tax. FALSE

99. The sale of services abroad is subject to 12% final withholding VAT. FALSE

100. The final withholding VAT is 12% of the contract price of purchased services from within the

Philippines. FALSE

101. The VAT on importation is 12% of the receipts from the sale of services abroad. FALSE

102. Importation is subject to either VAT or percentage tax. FALSE

103. The transfer is either bilateral or unilateral. TRUE

104. Unilateral transfer is subject to transfer tax. TRUE

105. Bilateral transfers are subject to income tax. TRUE

106. Unilateral transfers include sales and barters. FALSE

107. Bilateral transfers include inheritance and donations. FALSE

108. Donations inter-vivos are subject to estate tax. FALSE

109. A donation mortis causa is subject to donor’s tax. FALSE

110. The transferee in a donation is referred to as a done. TRUE

111. The transferee in a succession is referred to as an heir. TRUE

112. The transferor in a donation inter-vivos is a donor. TRUE

113. The transferee in a donation mortis causa is a decedent. FALSE

114. Complex transfer are subject to both income tax and transfer tax. TRUE

115. What constitutes an “adequate consideration” is a question of fact. TRUE

116. Both the transfer and exchange element of a complex transfer are subject to transfer tax. TRUE

117. Transfer tax supports income taxation. TRUE

118. Transfer tax is intended to recoup future reduction in business tax. FALSE

119. Transfer tax can be viewed as a mode of redistribution of wealth to society. TRUE

120. The dominant view of transfer tax is the ability to pay theory. FALSE

121. Transfer tax is a tax on the privilege to transfer property gratuitously. TRUE

122. Transfer tax are national taxes. TRUE

123. Transfer tax is a form of specific tax. FALSE

124. Transfer tax is an indirect tax. FALSE

125. Transfer tax is a revenue tax. TRUE

126. Transfer taxpayers are classified into two groups: residents and non-residents. FALSE

127. Non—resident aliens are subject to tax only on transfers of Philippine properties. TRUE

128. Citizens are subject to tax on transfer of properties regardless of location. TRUE

129. Aliens are subject to tax only on transfers of properties situated in the Philippines. FALSE

130. Residents are subject to tax on transfers of properties regardless of location. TRUE

131. Non-residents are taxed only on transfers of property located in the Philippines. TRUE
132. The reciprocity rule on intangible personal property applies only to non-resident aliens. TRUE

133. The reciprocity rule may apply to movable personal property located in the Philippines. FALSE

134. The reciprocity rule applies to intangible properties of any alien located in the Philippines.

FALSE

135. Franchises are subject to transfer tax in the place where they are exercised. FALSE

136. The share and bonds of domestic corporations are presumed situated in the Philippines for

purpose of transfer taxation. TRUE

137. For purposes of transfer tax, the interest in a business partnership organized abroad is presumed

situated abroad. FALSE

138. Cash is considered an intangible property. TRUE

139. Shares of stocks and bonds are tangible personal properties. FALSE

140. Donations inter-vivos are subject to transfer tax at the point of death of the donor. FALSE

141. Donations mortis causa are subject to transfer tax at the death of the decedent. TRUE

142. Donations inter-vivos are inspired by the generosity of the donor. TRUE

143. A donation mortis causa is effected by the death of the decedent. TRUE

144. As a rule, all properties of the donor existing at the point of death constitute his donations mortis

causa. TRUE

145. All forms of gratuitous transmission of property while the donor is living is considered donation

inter-vivos. FALSE

146. When the incomplete transfers are completed during the lifetime of the transferor, the transfer is

subject to donor’s tax. TRUE

147. Incomplete transfers which are pre-terminated by the death of the transferor are subject to estate

tax. TRUE

148. Incomplete transfers are not subject to tax upon physical transfer of the property. TRUE

149. Estate tax rates are higher than donor’s tax rates. TRUE
150. The transfer or property which conveys title to the property only upon death of the donor are

donations mortis causa. TRUE

151. Transfer in contemplation of death are donations made inter-vivos but are actually donations

mortis causa. TRUE

152. Which is subject to transfer tax –D. Gratuitous and complex transfer (A and C)

153. Which is subject to transfer tax – Donation

154. A property is transferred for less than full consideration when it is sold – below the FV of the

property

155. Gratuity is not characterized by – presence of adequate consideration

156. Transfers for full or adequate consideration is subject to – income tax

157. Transfer for inadequate consideration is subject to - C. Income tax and Transfer tax (A and B)

158. The transfer for adequate consideration is – exempt from transfer tax

159. Estate tax is an excise tax. TRUE

160. Adopted children, for all intents and purposes are considered as legitimate children. TRUE

161. An heir who inherits a specific personal property by will is known as devisee. FALSE

162. Devisees and legatees are persons to whom gifts of real or personal property are respectively

given by virtue of a will. TRUE

163. A person has unlimited right to make donations in his last will and testament. FALSE

164. If zonal value is available at date of death, and this is higher than the fair market value per

assessor’s listings of values, then the amount to be reported in the gross estate is the zonal value.

FALSE

165. A special power of appointment authorizes the donee of the power to appoint only from among a

designated class or group of persons other than himself. FALSE

166. Donation is an act not a contract. FALSE

167. Tax shall be imposed to the transfer of property by gift, whether transfer is in trust or otherwise,

whether the gift is direct or indirect and whether property is real or personal, tangible or intangible.

TRUE

168. Donor’s tax is imposed on the exercise of the donor’s right to transfer property after death.

FALSE

169. Donor’s tax is a property tax. FALSE

170. Donor’s tax is an excise tax. TRUE

171. Donor’s tax is an indirect tax. FALSE

172. Donor’s tax applied to both natural and juridicial persons. TRUE

173. A transfer is taxable only when it is completed and when the owner has divested himself from

any beneficial interest in the property transferred and has no power to revest such interest. TRUE

174. The gift is completed by delivery either actual or constructive. TRUE

175. A gift is perfected when the donor knows of the acceptance by the done. TRUE

176. There are strained and artificial construction of supplementary statute than can be included to tax

as gift a transfer actually lacking of donative intent. FALSE

177. Donative intent is not necessary in indirect gifts. TRUE

178. Donor’s tax shall tax the gift based on the FMV of the gift at the time donation is perfected.

TRUE

179. Tax law considers donation merely as an act. FALSE

180. There should be meeting of minds between donor and done before donation of the contract was

perfected. TRUE

181. Oral donation requires simultaneous delivery of the thing or document representing the right

donated. TRUE

182. Donation is a formal contract. TRUE

183. In immovable donation, acceptance may be made in the same deed of donation or in a separate

instrument. TRUE
184. Renunciation of a surviving spouse of his share in the conjugal partnership or absolute

community after dissolution is generally subject to donor’s tax. TRUE

185. General renunciation by an heir including the surviving spouse in the hereditary estate is subject

to donor’s tax. FALSE

186. Donor’s tax is on a cumulative basis. TRUE

187. A donation to a political party, coalition of parties or to any candidate is subject to donor’s tax.

FALSE

188. Husband and wife are conjugal tax payers in donor’s tax. FALSE
1. The purchase of bangrus (milkfish) to be processed into sardines shall entitle the manufacturer of
sardines to a 4% presumptive input tax. TRUE?

2. Estate tax is considered a property tax because it is imposed on property transmitted by the decedent to
the heirs. FALSE

3. If there is reciprocity, the intangible personal property in the Philippines of the nonresident alien is
subject to estate tax in the Philippines. FALSE

4. Winnings in gambling is conjugal property. However, losses thereon shall be borne exclusively by the
loser-spouse. TRUE

5. Death benefit from GSIS is exempt from estate tax. TRUE

6. The perfection of a donation inter vivos is at the moment when the donor knows the acceptance of the
done. TRUE

7. There may be a property relationship of conjugal partnership of gains even if marriage was on or after
August 3, 1988. FALSE

8. 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. TRUE

9. A separate return shall be filed by each donor for each gift or donation made on different dates during
the year reflecting therein any previous net gift made in the same calendar year. TRUE

10. Unilateral transfers are subject to transfer tax. TRUE

11. Incomplete transfers are not subject to tax upon physical transfer of the property. TRUE

12. Donor’s tax is imposed upon the properties of a decedent while estate tax is imposed on a donor.
FALSE

13. Transfer for adequate consideration is subject to transfer tax. FALSE

14. Corporations are also subject to estate tax. FALSE

15. Void transfers are subject to transfer taxes. FALSE

16. The heirs shall not inherit the debt of the decedent. TRUE

17. Claims against insolvent persons shall be included in the gross estate at its full amount. TRUE

18. Foreign estate tax credit is only available to estates of citizen or resident alien decedents. TRUE?

19. Donation of movables must be in writing and in a public instrument. TRUE?

 20. Only one return shall be filed for several gifts or donations by a donor made on the same date to
different donees. TRUE

21. With a last will and testament, the decedent can name any person which he wants as heirs. FALSE?

22. In default of compulsory heirs, the government shall inherit the estate of the decedent. FALSE

23. Properties not owned by the decedent may be included in gross estate. FALSE

24. The motives of the donation shall be the basis of its taxation. TRUE

25. Properties are valued at the higher of the fair value and acquisition cost. TRUE?

189.

MULTIPLE CHOICE
1. Who is ultimately liable for the rectification of spirits?

a. Distiller
b. Rectifier
c. Both distiller and rectifier
d. Transporter

2. The excise tax on minerals does not apply to?

a. Diamond and sapphire

b. Gold, chromite, copper, silver or iron
c. Natural gas
d. Indigenous petroleum

3. A company sells sports care with selling prices ranging 2M to 20M. During the month, it completed
production of 2 units of a model with aggregate cost and wholesale price of 2M and 6M. What is the ad
valorem tax?

a. 3.0M
b. 1.2M
c. 600,000
d. 0

4. Which one is not included in the tax base of VAT on importation?

a. customs duties
 b. other charges after the release of imported goods from BOC
c. excise tax
d. value used by BOC in determining tariff and customs duties

5. Which importations is subject to VAT?

a. Neither A nor B
b. Purchase of goods from economic zones in the Philippines
c. Importation from abroad
d. Both A and B

6. Which is not subject to VAT on importation?

a. Importation of goods for business use

b.  Purchase of goods from Ecozone entities
c. Purchase of goods from other domestic sellers
d. Importation of goods for personal use

7. Which of the following is subject to the VAT on importation when imported?

a. Books
b. Table sugar
c. Mushroom
d. Ordinary salt

8. Bigay Gabay, Inc. enjoys tax exemption for its importations. During a particular month, it imported
goods from Japan. After the release from customs custody, Bigay Gabay, Inc. transferred the imported
goods to Todo Bigay Trading, a VAT registered entity. For VAT pruposes, the VAT on importation
shall be paid by:

a. Bigay Gabay only

b. both Bigay Gabay, Inc. and Todo Bigay Trading
c. neither Bigay Gabay, Inc, nor Todo Bigay Trading
d. Todo Bigay only

9. Ms. Consuelo Dimagulo receives a package of goods from her sister who lives in California, USA. Ms.
Consuelo will use the goods for personal purposes. She is not VAT-registered. Which of the following
statements is correct in connection with the receipt of a package?

a. Ms. Consuelo shall not be subject to VAT on importation because she is not VAT-registered
b. None of the choices
c. Ms. Consuelo shall be subject to VAT on importation
d. Ms. Consuelo shall not be subject to VAT on importation but shall be subject to VAT on sales

10. Three (3) of the following are exempt from the value-added tax. Which is the exception?

a. Export sales by persons who are not VAT registered

b. Services rendered by persons subject to percentage tax
c. Receipts from leasing of personal properties
 d. Sales or importation of medical, dental and veterinary medicines

11. Which agricultural product is VAT-exempt on importation?

a. Wood
b. charcoal
c. Lumber
d. Corn

12. Which is subject to value added tax?

a. Cut sheep meat

b. Sheep word
c. All of these
d. Sheep

13. Which statement is incorrect? VAT on importation of goods:

a. may not be available as input tax

b. shall be paid prior to removal from customs custody
c. is imposed on an importation for sale or for use in business
d. is imposed on an importation for personal use

14. In the case of importation of taxable goods, who shall be liable to VAT?

a. None of the choices

b. Importer if made in the course of trade or business only
c. Importer if corporation and only when made in the course of trade or business
d. Importer, whether an individual or corporation and whether or not made in the course of his
trade or business

15. Three (3) of the following are exempt from the value-added tax. Which is the exception?

a. Services rendered by persons subject to percentage tax

b. Sales or importation of medical, dental and veterinary medicines
c. Export sales by persons who are not VAT registered
d. Receipts from leasing of personal properties

16. The gratuitous component of transfer for inadequate consideration is

a.Subject to income tax
b.Exempt from income tax
c.Exempt from transfer tax
d.A and B
17. The reciprocity exemption covers which properties
a.Intangible personal property located abroad
b.Intangible personal property located in the Philippines
c.Tangible and intangible properties located abroad
d.Tangible and intangible properties located in the Philippines

18. Assuming Mr. Koto is a non-resident alien and the reciprocity rule applies, what is the amount of
donation mortis causa?
a.P 0
c. P 3,500,000
b.P 3,000,000
d. P 7,500,000

19. A surviving spouse is a compulsory heir classified under

a. Primary heir
b. Secondary heir
c. Concurring heir
d. Voluntary heir

20. One of the following donations is not included in the computation of the gross estate

a. Revocable transfers
b. Transfers with reservation of certain rights
c. Transfers under special power of appointment
d. Transfers in contemplation of death

21. Which of the following values is not used when valuing gross estate?

a. Fair market value at time of death

b. Fair market value at the time the estate return is filed
c. Zonal value when higher than the assessed value in case of real property
d. Book value in case of shares not traded in the stock exchange

22. Which of the following is not included in the gross estate?

a) Revocable transfer where the consideration is not sufficient

b) Proceeds of life insurance where the beneficiary designated is the estate and the designation is
irrevocable
c) Revocable transfer where the power of revocation was not exercised
d) Proceeds of life insurance where the beneficiary designated is the mother and the designation is
irrevocable
23. Which is not authorized to take charge of the estate during the intestate period?

a) Administrator
b) Executor
c) Court
d) Heirs

24. If the surviving heirs in an intestate succession are the parents and a legitimate child of the decedent,
what is the share of the parents in the legitime?

a) 1/3
b) ½
c) ¼
d) None

25. The following are properties in the gross estate with their fair market values:
House & lot, family home in Quezon City, P 1,800,000
Bank deposit in the foreign branch of a domestic bank, P 600,000.
Bank deposit in Manila branch of a foreign bank, P 400,000
Shares of stock issued by San Miguel Corp, a domestic corporation certificate kept in the USA,
P1,200,000
Franchise exercised in Makati, Philippines, P700,000
Receivable, debtor from the Visayas, P250,000

How much is the value of the gross estate if the decedent is a nonresident alien and there isno
reciprocity?

a) P4, 350,000
b) P3, 400,000
c) P2, 550,000
d) P2, 300,000

26. Justification for the imposition of transfer tax is

a) Redistribution of wealth theory

b) Benefit received theory
c) State partnership theory
d) All of the above

27. A person appointed by the testator to carry out the provisions of the will is called

a) Administrator
b) Executor
c) Enforcer
d) Beneficiary
28. CHONG SY, Filipina, died in the Middle East leaving the following properties:
House and lot in the Middle East - 1,000,000
Vacant lot in Manila - 2,000,000
Shares of stock, Domestic Corp., 60% of the business is located in the Philippines - 200,000
Shares of stock in a Foreign Corp., 70% of the Business is located in the Philippines - 300,000
Car in Manila - 500,000

How much is Ms. SY's gross estate?

a) P 4,000,000
b) P 3,500,000
c) P 3,200,000
d) P3, 000,000

29. Which of the following could legally effect transfer of properties through succession?

a) By virtue of a will
b) By operations of law
c) By onerous transfer
d) By both “a” and “b”

30. Which of the following is not to be included in the gross estate of citizen decedent?

a) Dividend income declared, but not yet actually received at date of death.
b) Share in partnership’s profit earned immediately after the date of death.
c) Rent income accrued before death but collected after death.
d) None of the above

31. The following are causes for disinheriting a spouse, which is not ?

a) When the spouse justifiably refuses to support the children or the other spouse.
b) When the spouse has accused the testator of a crime for which the law prescribes imprisonment for
six years or more, and the accusation has been found to be false.
c) When the spouse by fraud, violence, intimidation or undue influence causes the testator to make a
will or to change one already made.
d) When the spouse has given cause for legal separation

32. Which of the following transfers is included in the gross estate ?

a) Transfer inter vivos

b) Transfer under general power of appointment
c) Transfer under special power of appointment
d) Transfer for an adequate and full consideration

33. It deprives an heir to inherit properties by the decedent through the issuance of a will

a) Disinheritance
b) Distributable share
 c) Legitimate
d) Disqualification

34. When will the transfer through succession be effective ?

a) Upon the signing of a written will
b) b) Upon payment of estate tax
c) c) Upon death of the testator
d) d) Upon registration in the register of deeds

35. Which of the following is regarded as an intestate succession ?

a) The will is designating the State as beneficiary of the free portion.

b) The will was subsequently rendered void by circumstances.
c) The will designate a part of the free portion to a stranger.
d) The will disposed of the legitime to its rightful heir

36. DINA NATUTO, Filipina, died in the USA with the following properties:
Condo unit in New York City - 2,500,000
Shares of stock in a foreign corporation - 800,000
Interest in a partnership business, domestic - 400,000
Bank deposit in a New York City bank - 100,000
Car in Cebu, donated inter vivos 5 years ago to her son - 350,000

Assume the decedent is a nonresident alien (with reciprocity), how much is her gross estate?

a) P3, 800,000
b) P3, 700,000
c) P3, 300,000
d) P None

37. The elements of succession are:

I. Decedent
II. Estate
III. Heirs
IV. Administrators/Executors

a) I and II only
b) I, II and III only
c) All of the above
d) None of the above

38. Decedent, Jose Aguinaldo has the following information:

Value of property at the time of sale P 1,200,000
Value of consideration when sold 1,000,000
Value of the property at the time of death 1,500,000
 What is the amount to be included in the gross estate of Jose Aguinaldo?

a) P 100,000
b) P 200,000
c) P 300,000
d) P 500,000

39. Succession which results from the designation of an heir, made in a will executed in the formprescribed
by law is known as

a) Legal or intestate succession

b) Testamentary succession
c) Mixed succession
d) Ordinary succession

40. The following are properties in the gross estate with their fair market values:
House & lot, family home in Quezon City, P 1,800,0
Bank deposit in the foreign branch of a domestic bank, P 600,000
Bank deposit in Manila branch of a foreign bank, P 400,000
Shares of stock issued by San Miguel Corp, a domestic corporation certificate kept in the USA,
P1,200,000
Franchise exercised in Makati, Philippines, P700,000
Receivable, debtor from the Visayas, P250,000

How much is the value of the property to be excluded from the gross estate if decedent is a nonresident
alien and there is reciprocity ?

a) P4,300,000
b) P3,150,000
c) P2,900,000
d) P2,500,000

41. The object of estate tax is the

a) Properties of the decedent.

b) Beneficiaries
c) Right to transmit
d) Decedent

42. Mr. Sam Paul imported cigarettes from the United States for sale in the Philippines. What business taxes
in the Philippines are due?
a. VAT, excise tax, other percentage tax
b. VAT and excise tax
c. Other percentage tax and excise tax
d. VAT and percentage tax
43. A creditable input tax allowed on one who becomes subject to VAT for the first time
a. Presumptive input tax
b. Transitional input tax???
c. Excess input tax
d. Total input tax

44. Which of the following transfers is included in the gross estate?

a. Transfer inter vivos
b. Transfer under general power of appointment
c. Transfer under special power of appointment
d. Transfer for an adequate and full consideration

45. 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
a. Excluded from the gross estate
b. Part of the gross estate whether the beneficiary is revocable or irrevocable
c. Part of the gross estate if the beneficiary is revocable
d. Part of the gross estate if the beneficiary is irrevocable

46. Which of the following is not a part of the gross estate?

a. Conjugal property
b. Community property
c. Exclusive property of the decedent
d. Exclusive property of the surviving spouse

47. A tax imposed on the gratuitous transfer of property between two or more persons who are living at the
time the transfer is made
a. Estate tax
b. Gift tax
c. Income tax
d. Business tax

48. Donor’s tax return shall be filed within

a. 30 days after the gift has been made
b. 6 months from the date of gift
c. 25 days after giving the gift
d. 30 days after the end of every quarter

1. The estate of citizen or resident decedent may claim a standard deduction of

a. P5,000,000
b. P200,000
c. P2,000,000
d. P500,000

2. From the decedent’s death, the estate tax return shall be filed within
 a. 3 months
b. 6 months
c. 1 year
d. None of the above

3. One of the following statements is incorrect.

a. Imported goods which are subject to excise tax are no longer subject to value-added tax.
b. VAT on the importation is paid to the Bureau of Customs before the imported goods are released
from its custody.
c. Expenses incurred after the goods are released from customs custody are disregarded in computing
VAT on importation.
d. When a person who enjoys tax-exemption on his importation subsequently sells in the Philippines
such imported articles to non-exempt person, the purchaser-non-exempt person shall pay the VAT
on such importation.

4. Three of the following are exempt from the value-added tax. Which is the exception?
a. Importation of books and any newspapers, magazines, review or bulletin.
b. Importation of agricultural and marine food products in their original state.
c. Importation of petroleum products and their raw materials.
d. Importation or sale of fish, prawn, livestock and poultry feeds.

5. Gross estate includes all his property, real or personal, tangible or intangible wherever situated, except
a. Resident citizen
b. Non-resident citizen
c. Resident alien
d. Non- resident alien

6. Under the absolute community of property, jewelry for personal and exclusive of the wife shall belong
to the
a. Wife
b. Husband
c. Husband and wife
d. Children

7. A died leaving a farm land. In his will, he transferred the ownership thereof to B but subject to the
condition that C will have the right to use the land for a period of ten years (usufruct).In the seventh year
however, C died and in C’s will he surrendered his right over the land to B.
a. The transfer is subject to donor’s tax.
b. The transfer is subject to estate tax.
c. The transfer is both an inclusion from the gross estate.
d. The above is tax exempt transfer.
8. The allowable transitional input tax is
a. The lower between 2% of the value of beginning inventory or actual vat paid on such inventory.
b. The higher between 2% of the value of beginning inventory or actual vat paid on such
inventory.
c. The actual vat paid on beginning inventory.
d. 2% of the value of beginning inventory.

9. Which of the following statements is correct?

a. The gross estate of a resident citizen decedent would not include all properties, whether real or
personal and whether within or without.
b. The gross estate of an American decedent who was a resident of the Philippines includes all
properties in the Philippines only.
c. The gross estate of a Filipino decedent who was residing in Australia would include all
properties regardless of location.
d. The personal property of a non-resident alien is not included in the gross estate in the Philippines if
they are intangible.

10. Which of the following is not included in the gross estate?

a. Revocable transfer where the consideration was not sufficient
b. Revocable transfer where the power of revocation was not exercised
c. Transfer under a general power of appointment where the consideration was not sufficient
d. Transfer under a special power of appointment

11. Which of the following is not included in the gross estate?

a. Transfer in contemplation of death where the consideration is not sufficient
b. Revocable transfer where the power of revocation was not exercised
c. Proceeds of life insurance where the beneficiary designated is the executor and the designation is
irrevocable
d. Proceeds of life insurance where the irrevocably designated beneficiary is the mother

12. Which statement is wrong? Losses are deductible from the gross estate:
a. if arising from earthquake.
b. if not compensated by insurance
c. if the loss arises from sale of capital assets.
d. if incurred during the settlement of the estate.

13. The following are the requisites of a donation for purposes of the donor’s tax, except one:
a. capacity of the donor
b. delivery of the subject matter of gift
c. capacity of the donee
 d. donative intent

14. 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 alien of the Philippines, will include only
property located in the Philippines.
a. both statements are correct
b. both statements are wrong
c. The first statement is correct and the second statement is wrong.
d. The first statement is wrong and the second statement is correct.

15. The reciprocity clause to non-resident alien applies to

a. Real property
b. Intangible personal property
c. Tangible personal property
d. All properties

16. In computing the donor’s tax on a subsequent donation, the donor must also consider:
a. All prior net gifts during his lifetime.
b. All prior net gifts during the calendar year.
c. The present and the immediately preceding donation.
d. Only the present donation.

17. For the donation to be considered valid, acceptance of the donation must be made.
a. during the lifetime of the donor only.
b. during the lifetime of the donee only
c. during the lifetime of the donor and the done
d. none of the choices

18. Who is the taxpayer in donor’s tax?

a. Donor
b. Trustee
c. Donee
d. Beneficiary

19. In computing the gross estate of a decedent:

a. If he was a non-resident, but citizen of the Philippines, tangible and intangible, regardless of
location, shall be included.
b. If he was a resident who was not a citizen of the Philippines, tangible and intangible properties,
regardless of location, shall be included.
c. If he was a non-resident who was not a citizen of the Philippines, tangible and intangible
personal properties, located in the Philippines, shall be included.
d. All above statements are correct.
20. Which statement is wrong? The gross estate shall be valued:
a. At its fair market value at the time of death
b. At its fair market value at the return is due
c. In real property, the zonal value, which may be higher than the assessed value
d. In the case of common share of stock, at book value

20. Personal property with a cost of P400,000 and a fair market value at the time of death P900,000, but
subject to a mortgage of P250,000
a. Shall be in the taxable net estate at P500,000
b. Shall be in the gross estate at the decedent’s equity of P650,000
c. Shall be in the gross estate at P400,000
d. Shall be in the gross estate at P900,000

21. I. 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.

II. There may be a property relationship of conjugal partnership of gains if marriage was on or after
August 3, 1988.

a. Only the first statement is true.

b. Only the second statement is true.
c. Both statements are true.
d. Both statements are false.

22. Which of the following is correct? Under the system of conjugal partnership of gains and absolute
community of property:

a. Property acquired during the marriage by inheritance or gift is exclusive property under
both systems.
b. Property owned before the marriage is exclusive property under both systems.
c. Income of property under (a) is exclusive property under both systems.
d. Property under (a) may be conjugal or community when expressly declared by the benefactor as
conjugal or community.

23. One of the following statements is wrong:

a. Amounts receivable under RA 4917, and during the marriage , are conjugal properties.
b. Income out of the labor of the husband is conjugal property
c. Income out of exclusive property of the wife is conjugal property
d. Property inherited when the fair market value was P600,000, sold for cash during the
marriage when the value was P1,000,000 resulted in gain of P400,000. The gain is conjugal
property.
24. Which of the following statements is wrong? For, a decedent who was married at the time of death,
there may be deductible funeral expense:

a. Whether paid or unpaid

b. By funeral expenses incurred before internment
c. Reduces the distributable estate by the allowable 5% of the gross estate
d. At not more than P200,000

25. Which of the following statements is wrong? Deduction for funeral expenses shall be allowed:
a. Shall in no case exceed 5% of the gross estate
b. Shall in no case exceed P200,000
c. Only if paid out of the estate
d. For non-resident alien, only that which was actually incurred in the Philippines.

26. Which of the following deductible for the purpose of computing the net distributable estate?
a. Vanishing deduction
b. Standard deduction
c. Unpaid medical expenses
d. RA 4917

27. I. Losses can be deducted only if incurred during the settlement of the estate.
II. Losses can be deducted only if the property lost is included in the gross estate.
a. Both statements are true
b. Both statements are false
c. The first statement is true, but the second statement is false
d. The first statement is false, but the second statement is true

28. A resident Filipino, died on May 5, 2012 and his estate incurred losses as follows:
I. From fire on July 2, 2012 of improvement on his property not compensated by insurance.
II. From flood on July 2, 2011 of household furniture also not compensated by insurance.

a. 1st loss is not deductible and 2nd loss is deductible

b. Both losses are not deductible
c. Both losses are deductible from gross estate
d. 1st loss is deductible and 2nd loss is not

29. Which statement is correct? Real property with a cost of P300,000 and a fair market value at the time of
death of P1,000,000, but subject to mortgage of P200,000
a. Shall be in the taxable net estate of P800,000
b. Shall be in the gross estate at the decedent’s equity of P800,000
c. Shall be in the gross estate at P300,000
d. Shall be in the gross estate at the decedent’s equity at P100,000
30. A resident decedent was married under the conjugal partnership of gains. An obligation of P100,000,
incurred during the marriage and secured by a mortgage of exclusive property is:
a. A deduction from the gross estate at P100,000 against conjugal property.
b. A deduction from the gross estate at P100,000 against exclusive property
c. A deduction of P50,000 from the gross estate against conjugal property,
d. A deduction of P100,000 from the gross estate against exclusive property, but with a receivable of
P50,000 from the surviving spouse.

31. Which statement is correct? Claims against the estate, as deduction from the gross estate:
a. Represents obligations enforceable during the lifetime of the decedent
b. Should always be evidenced by a notarized document
c. Is sufficient for deductibility if a valid obligation under the law on obligations
d. If unpaid mortgage of a non-resident, not citizen of the Philippines, the property should be included in
the Philippines gross estate.

32. Which of the following is deductible from the gross estate?

a. Income tax paid on income received after death
b. Unpaid property taxes accrued in the year of death
c. Donor’s tax accrued after to death
d. Estate tax paid to a foreign country

33. Which is wrong? Deduction for transfers for public purpose:

a. Means legacy in a last will and testament to the government
b. Means device in a last will and testament to the government
c. Includes properties transferred inter vivos
d. Will not include legacies to charitable institutions

34. Which of the following statement is correct? Property subject to vanishing deduction should be:
a. If the decedent was a not citizen nor resident of the Philippines, the property should not be located in the
Philippines.
b. If the decedent was a citizen or resident of the Philippines, the property may not be located in the
Philippines.
c. If the decedent was a citizen but a resident of the Philippines, the property need not be located in the
Philippines.
d. If the decedent was a citizen and resident of the Philippines, the property should be located in the
Philippines.

35. A citizen of the Philippines and resident od Baguio City, died testate on May 10, 2013. Among his
gross estate are properties inherited from his deceased father who dies on April 4, 2010. What
percentage of deduction will be used in computing the amount of vanishing deduction?
a. 80% of the value taken as basis for vanishing deduction
b. 100% of the value taken as basis for vanishing deduction
c. 60%
d. 40%

36. I. For a vanishing deduction, there should always be two deaths within five years from receipt of
property.
II. For a vanishing deduction, there should always be two transfer of property within five years whether
the first transfer be gratuitous or onerous.
a. Both statements are true
b. Both statements are false
c. The first statement is true, but the second statement is false
d. The first statement is false, but the second statement is true

37. Which statement is wrong? For a non-resident, not citizen of the Philippines:
a. There are no special deductions from the gross estate
b. There can be no deduction for funeral expenses entirely incurred outside the Philippines
c. There can be a vanishing deduction
d. There can be a deduction for transfer for public use

38. Only one statement is correct. Deduction for family home:

a. Shall be allowed if the family home is in the Philippines
b. Shall be at a maximum of P1,000,000 based on cost
c. May be allowed for family homes (one in the city and another in the province), both in the Philippines
and with certificates of the barangay captains
d. Shall be deducted at lesser than P1,000,000 if, with vanishing deduction and unpaid mortgage or
indebtedness, the value of the family home is already reduced to zero.

39. Which statement is true?

a. A single person who is not a head of family may not have a deduction for family home
b. There can be a deduction for two family homes if their aggregate value does not exceed P1,000,000
c. Deduction may be claimed for a family home of a non-resident of the Philippines located outside the
Philippines
d. A family home is always conjugal/community property

40. One of the statement is wrong. Identify. Medical expenses deductible from the gross estate:
a. Only if the decedent was a citizen or resident of the Philippines at the time of death
b. Is actual medical expenses of P500,000, whichever is lower
c. Need not be on the illness resulting in death
d. Must not be paid before death
 41. The following expenses, except one, should be paid or take place within a certain period in order to be
deductible from the gross estate of a citizen or resident decedent. Which is the exception?
a. Vanishing deduction
b. Judicial expenses
c. Medical expenses
d. Claims against the estate

42. Estate tax credit for foreign estate tax paid is available to the estate of:

a. Resident or citizen of the Philippines

b. Non-resident alien
c. All kinds of decedents
d. None of these

MULTIPLE CHOICE – PROBLEMS

1. A citizen of the Philippines, single, died a resident of Canada, leaving the following properties:
Real property in Canada, inherited from father one and one-half years ago P2,000,000
Personal property in the Philippines inherited from father 1,600,000
Family home in Canada
1,400,000
The gross estate subject to Philippine estate tax is:
a. P3,400,000
b. P1,600,000
c. P5,000,000
d. P3,000,000

2. A revocable transfer with a consideration received:

Consideration received P200,000
Fair market value of property at the time of transfer 300,000
Fair market value of property at the time of death 250,000
Value to include in the gross estate is:
a. 300,000
b. 100,000
c. 250,000
d. 50,000

3. A citizen of Japan, residing in Hongkong, with properties in Hongkong and the Philippines, had the
following data on properties and rights at the time of his death and their values.
 Real estate, Hongkong P1,000,000
Real estate, Philippines 2,000,000
Shares of stock of a domestic corporation 200,000
Shares of stock of a Japanese corporation 300,000
Shares of stock of a Canadian corporation,
doing business in the Philippines only 100,000
Philippine peso deposit in Metrobank 500,000
Receivable under a life insurance with an
insurance company doing business in Hongkong 250,000
The gross estate that should be reported in the Philippines is:
a. P4,350,000
b. P2,800,000
c. P3,700,000
d. P4,000,000

4. The following relate to the disposition of property made by a seller:

Selling price P4,200,000
Fair value of property on date of sale 4,000,000
Fair value at death of the seller 5,000,000
What is the amount subject to donor’s tax?
a. P0
b. P200,000
c. P800,000
d. P4,000,000

5. A non-resident alien decedent died leaving the following:

An agricultural land in Korea P12,000,000
A car in Indonesia 2,000,000
Shares of stocks in Brunei 4,000,000
Cash in Japanese banks 1,200,000
Cash in Philippine banks 2,000,000
Investment in bonds of domestic corporations 500,000
Compute the gross estate:
a. P0
b. P2,000,000
c. P2,500,000
d. P17,700,000

6. Mr. John Nalang died leaving the following properties:

Car P1,000,000
Interest in a joint venture business 2,000,000
House and lot, separate property of his wife 2,500,000
Proceeds of insurance, revocably designated to wife 500,000
Total P6,500,000
 Compute the amount to be included in gross estate:
a. P2,500,000
b. P3,000,000
c. P3,500,000
d. P6,500,000

7. Mr. Jung, a Korean citizen residing in Seoul, South Korea, died with the following properties in the
Philippines:
P2,500,000 car – given to a resident Filipino friend as a revocable donation; Mr. Jung waived his right to
revoke the donation on his last visit to the Philippines
P3,000,000 share investment in listed firms held by a Philippine stock broker
P5,000,000 interest in a partnership operating in the Philippines
P1,500,000 car
Filipino non-residents are not subject to estate tax in South Korea.
Compute the gross estate of Mr. Jung.
a. P0
b. P1,500,000
c. P9,500,000
d. P12,000,000

8.