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Answers To Assignment 1 and Problem Exercises Taxation2

The document provides information about the properties, expenses, and obligations of two deceased individuals, Mr. Salvador and Mr. Laurel. It includes details of their assets, liabilities, and marital statuses. It then asks multiple choice questions about calculating the gross estates, deductions, surviving spouse shares, and net taxable estates of each individual based on the information provided.

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Dexanne Bulan
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247 views

Answers To Assignment 1 and Problem Exercises Taxation2

The document provides information about the properties, expenses, and obligations of two deceased individuals, Mr. Salvador and Mr. Laurel. It includes details of their assets, liabilities, and marital statuses. It then asks multiple choice questions about calculating the gross estates, deductions, surviving spouse shares, and net taxable estates of each individual based on the information provided.

Uploaded by

Dexanne Bulan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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ANSWERS TO ASSIGNMENT 1 AND PROBLEM EXERCISES

Taxation2

Mr. Salvador, Filipino, married on December 4, 1984, died on April 23, 1999
leaving the following property and expenses:

Conjugal property:
Personal property P1,300,000
Apartment and lot 1,000,000

Other property: Mode of acquisition: date: FMV-acquisition


FMV-time of death

Land inheritance 4/30/97 P50,000


P100,000
Jeep inheritance 4/30/97 100,000
20,000
San Miguel shares Donation 1/30/93 400,000
300,000

Claimed as deductions:

Funeral expenses P 50,000


Mortgage on apartment and lot 300,000
Loss of jeep 20,000

• The amount of P70,000 of the mortgage on the apartment and lot remain
unpaid at the time of Mr. Salvador’s death
• The land inherited had a mortgage of P30,000 which Mr. Salvador paid
before he died
• The jeep was carnapped on November 4, 1999

1. Gross estate is:

a. P2,420,000 b. 2, 300,000 c. 2,720,000 d. 2,670,000

2. Vanishing Deduction is :

a. P38,235 b. P 30,588 c. P 86,029.42 d. P 68,823.53

3. Share of surviving spouse:

a. P1,150,000 b. 2,180,000 c. 2,300,000 d. 1,090,000

4. Net taxable estate is :

a. P 2,569,412 b. P 419,412 c. 479,412 d.2,600,000

Solution :

EXCLUSIVE CONJUGAL
TOTAL

Gross Estate

Personal property P 1, 300,000


Apartment and Lot 1,000,000
P 2,300,000
Land P 100,000
Jeep 20,000
San Miguel shares 300,000 _________
420,000
Total P420,000 2,300,000
2,720,000
Less:
Ordinary Deductions
Funeral (50,000)
(50,000)
Unpaid mortgage on apartment & lot (70,000)
(70,000)
Vanishing Deduction* (30,588) _________
(30,588)
Net exclusive/conj estate P 389,412 P 2,180,000
P 2,569,412

Less: Special Deductions


Standard Deduction
(1,000,000)
Net Estate
1,569,412
Less: share of surviving spouse (1/2 of 2180,000)
( 1,090,000)
Net taxable estate
P 479,412

*Schedule of Vanishing Deduction

initial value
Land P 50,000
Jeep 20,000 P70,000
Less: mortgage paid 30,000
40,000
40,000/2,720,000 x 120,000 1,765
Final Basis of vanishing deductions P38,235
Vanishing Deductions (80%) P30,588

For Nos. 24 -25, see problem below:

Mr. Laurel, Filipino, married on December 4, 1989 died on Nov. 2, 1999. An


inventory of the spouses’ property, expenses, charges and obligations follow:

Acquired by purchase of Mr Laurel before the marriage:


Lot with apartment in Quezon City P1,800,000
Lot with apartment in Guadalupe, Makati 1,200,000

Fishpond in Bulacan inherited during the marriage by Mrs. Laurel


P1,500,000
Farm in Nueva Ecija inherited during the marriage by Mr. Laurel
600,000

Deductions:

Judicial expenses P200,000


Unpaid mortgage on farm 150,000
Funeral expenses 100,000
Unpaid mortgage on fishpond 100,000
Legacy to City of Makati 100,000
Accounts payable to a communal
Creditor 70,000
Fire loss on apartment in Makati 30,000

5. Net Taxable Estate is:

a. P 350,000 b. P650,000 c. 2,950,000 d. P1,950,000

6. Estate Tax is:

a. P27,000 b. P7,500 c. P 239,500 d. P 131,000

Solution:
EXCLUSIVE COMMUNITY
TOTAL

Gross Estate
Lot with apartment, QC P 1, 800,000
Lot w/apartment, Makati 1,200,000
P 3,000,000
Farm, nueva ecija P 600,000
600,000

Total P 600,000 P3,000,000


P 3,600,000

Less:
Ordinary Deductions
Funeral P 100,000
P 100,000
Judicial Expense 200,000
200,000
Accounts Payable 70,000
70,000
Fire Loss 30,000
30,000
Unpaid mortgage on farm P150,000
P150,000
Legacy to Makati City 100,000
100,000
Net exclusive/community estate P350,000 P2, 600,000
P2,950,000
Less: Special Deductions
Standard Deduction
(1,000,000)
Net Estate
P 1,950,000
Less: share of surviving spouse (1/2 of2,600,000)
P1,300,000
Net taxable estate
P 650,000

Estate Tax Due on 500,000 15,000


150,000 x 8% 12,000
P650,000 27,000

PROBLEM EXERCISES

QUESTION NO. 1

Mr. Benjamin Borja, a citizen and a resident of the Philippines, died on October 10,
2009, leaving the following properties, rights and obligations and charges:

Conjugal properties (including family home of P3, 000,000 and amount receivable
P6,000,000
Under RA 4917 of P200,000)
Exclusive properties (including cash of P500,000 inherited 4 ½ years ago)
4,000,000
Medical expenses unpaid, January 2009
600,000
Funeral expenses
350,000
Judicial expenses
500,000
Other obligations
100,000

The net taxable estate is:


a. P3,808,000
b. P5,058,000
c. P1,150,000
d. P2,250,000

QUESTION NO. 2

Mr. Armand Costales, a citizen and a resident of the Philippines, died on October 5,
2009. He was married and the property relationship during the marriage was the
absolute community of property. He left the following properties, with the market
value and the obligations and charges thereon:

Agricultural land P100,000


House and lot acquired by inheritance before
the marriage and 4 1/2 yrs ago, used as a
family home(with FMV of 420,000 and a
mortgage of 120,000 when acquired, 20,000
was paid by mr. Costales before he died) 500,000

Jewelry of mrs. costales, acquired during the marriage


With the income of mr. Costales 50,000
Clothes acquired during the marriage with income
During the marriage:
For use of mr. Costales 60,000
For use of mrs. Costales 70,000
Cash on hand and in banks: income from unidentified sources
Sources 300,000
Cash in bank:
From a sale at a loss of exclusive property 1,500,000
Received as gift 6 years ago and before the marriage
(current account) 40,000
Other properties:
Owned before the marriage 90,000
Acquired during the marriage 20,000

Total funeral expenses of P300,000 paid from the estate P58,000


Judicial expenses 120,000
Unpaid mortgage (already on the property at the time
acquired) on : agricultural land 20,000
house and lot 100,000
Other obligations 20,000
Legacy to the Philippine Govt (from current account) 10,000

The net taxable estate is:

a. P 660,932.33
b. 857,310.34
c. 698,620.70
d. 767,310.34

QUESTION NO. 3

Country A: Net estate of P100,000 and estate tax paid of P8,000; Country B: Net
estate of P200,000 and estate tax paid of P12,000; Philippines: Net estate of
P1,200,000. The decedent was a resident and a citizen of the Philippines. Estate
tax paid for foreign estate taxes paid?

a. P19,000
b. 18,333.33
c. 20,000
d. 12,000

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