ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY

CPA Review Batch 43  May 2022 CPA Licensure Examination  Week No. 1

TAXATION A. TAMAYO  E. BUEN  G. CAIGA  C. LIM  K. MANUEL

TAX-101: ESTATE TAX - ADDITIONAL CASES (Answers & Solutions)

Additional Cases
Estate Tax
1. The resident decedent is a married man with a surviving spouse with the following data died on January 15, 2018:
Conjugal real properties P 6,000,000
Conjugal family house 1,000,000
Exclusive family lot 400,000
Other exclusive properties 4,500,000
Conjugal ordinary deductions (including P200,000 funeral expenses and
P300,000 judicial expenses) 1,500,000
Exclusive ordinary deductions 500,000
Medical expenses 600,000

Compute the following using BIR Form No. 1801:

a. Line 34 page 2 (Gross estate)
b. Line 35 page 2 (Ordinary deductions)
c. Line 37D page 2 (Total special deductions
d. Line 40 page 2 (Net taxable estate)
e. Line 18 page 1 (Estate tax due)
Answer:
Exclusive Common Total
34 Gross estate P4,900,000 P7,000,000 P11,900,000
35 Less: Ordinary deductions 500,000 1,000,000 1,500,000
36 Estate after ordinary deductions 4,400,000 6,000,000* 10,400,000
37 Less: Special deductions
37A Standard deduction 5,000,000
Family house(1/2) 500,000
Family lot (full)) 400,000
Total 900,000
37B Maximum 10,000,000 900,000
37C Others (specify) -
37D Total special deductions 5,900,000
38 Net estate 4,500,000
39 Less: Share of surviving spouse (1/2 x 6,000,000*) (3,000,000)
40 Net taxable estate P1,500,000
17 Applicable tax rate 6%
18 Estate tax due P 90,000
Estate Tax: 2. The citizen decedent is unmarried head of the family with the following data died on March 1, 2018:
Real and personal properties (including P1,500,000 bank deposit, P500,000 of which was withdrawn
and subjected to 6% withholding tax) P 14,000,000
Family home 9,000,000
Ordinary deductions (including P100,000 funeral expenses and P200,000 judicial expenses) 2,000,000
Medical expenses 300,000
Compute the following using BIR Form No. 1801:
a. Line 34 page 2 (Gross estate) d. Line 40 page 2 (Net taxable estate)
b. Line 35 page 2 (Ordinary deductions) e. Line 18 page 1 (Estate tax due)
c. Line 37D page 2 (Total special deductions)
Answer:
29 Real properties (14,000,000 – 1,500,000) P12,500,000
30 Family home 9,000,000
31 Personal properties (1,500,000 – 500,000) 1,000,000
32 Taxable transfers -
33 Business interest -
34 Gross estate 22,500,000
35 Less: Ordinary deductions (2,000,000 -300,000) 1,700,000
36 Estate after ordinary deductions 20,800,000
37 Less: Special deductions
37A Standard deductions 5,000,000
37B Family home 9,000,000
37C Others (specify)
-
37D Total special deductions 14,000,000
38 Net estate 6,800,000
39
40
Less: Share of surviving spouse
Net taxable estate
0 0 6,800,000
-

17 Applicable rate 6%
18 Estate tax due P 408,000
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ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY TAX-101 Cases
Week 1: ESTATE TAX – ADDITIONAL CASES (Answers & Solutions)

Estate Tax: 3. Juan Santos, married decedent, who was under absolute community of properties died on October 15, 2018. His estate
provided the following information with their corresponding FMV at the time of death:
Residential land located in Masbate City, TCT No. 12345, Tax Declaration No. 23567 (300 sq. m.) inherited before
the marriage from his father who died 3 years before the present decedent’s death, assessed value P400,000 P 500,000
Commercial building located in Quezon City, TCT 143443, Tax Declaration No. 67890 (500 sq. m.) given as gift by
his uncle during the marriage 4 ½ years before the present decedent’s death, assessed value P12,000,000 15,000,000
Residential land located in Marikina City, TCT No. 78903, Tax Declaration No. 081156 (400 sq. m.) inherited during
the marriage from an aunt who died 6 years before the present decedent’s death, assessed value, P8,500,000 10,500,000
Residential house, TCT No. 091189 (500 sq. m.) built on the inherited land from aunt using communal fund 9,000,000
1,000 common shares of stock in ReSA Corporation, Stock Certificate No. 001756 traded in the stock exchange 600,000
Bank deposit, Bank of Philippine Islands, income from the real property received as gift by present decedent 500,000
Real properties received as donation by the surviving spouse before the marriage 10,800,000
Commercial farm located in Masbate City, Tax Declaration No. 90756 (2,000 sq. m.) acquired by the spouses during
the marriage 10,500,000
Various personal properties acquired during the marriage 10,000,000
Automobile transferred in contemplation of death 500,000
Proceeds of life insurance, beneficiary is revocably designated 1,500,000
The following were considered as deductions from the gross estate:
Actual funeral expenses 500,000
Judicial expenses 750,000
Medical expenses 800,000
Obligations incurred before marriage that benefited the community properties 950,000
Support of spouses to their common children and legitimate children of each spouse 100,000
Ante-nuptial debts of decedent that did not redound to the benefit of the family 50,000
Claims against a debtor who absconded 500,000
Unpaid mortgage on inherited land 900,000
Loss of car through theft on December 31, 2018 (part of personal properties acquired during marriage) 1,300,000
Transfer to a social welfare institution mortis causa 300,000

The value of the real properties at the time of inheritance was P300,000. The value of the real property received as gift from an uncle
was P10,000,000 at the time of donation.
The inherited land and the house built on it were certified as the family home of the decedent and his family by the Barangay Captain in
the locality where they were situated.
Additional information:
a. The administrator is Mr. Kenneth Caiga-Lim with Registered and Residence Address at 14 Dos Castillas, Sampaloc, Manila.
b. The administrator’s TIN is 143 456 789 000.
c. The Estate’s TIN is 313 056 921 000.
d. RDO No. 32
e. Residence of decedent is: 143 R. Papa, Sampaloc, Manila.
f. Zip Code 1008
g. The estate had been settled extra-judicially.

REQ: Accomplish the Estate Tax Return (BIR Form No. 1801) and answer the following:
1 – What amount shall be shown on Line 34 page 2 (Gross Estate)?
2 - What amount shall be shown on Line 35 page 2 ((Ordinary Deductions)?
3 – What amount shall be shown on Line 37D page 2 (Total Special Deductions)?
4 – What amount shall be shown on Line 40 page 2 (Net Taxable Estate)?
5 - What amount shall be shown on Line 24 page 1 (Total Amount Payable)?

Answer
Particulars Exclusive Community Total
29 Real property excluding family home P15,000,000 21,800,000 P36,800,000
30 Family home 10,500,000 9,000,000 19,500,000
31 Personal properties 500,000 11,600,000 12,100,000
32 Taxable transfer - 1,500,000 1,500,000
33 Business interest - - -
34 Gross estate 26,000,000 43,900,000 69,900,000
35 Less: Ordinary deductions 2,246,996 3,420,729 5,667,725
36 Estate after ordinary deductions 23,753,004 40,479,271 64,232,275
37 Less: Special deductions
37A Standard deduction 5,000,000
37B Family home 10,000,000
37C Others -
37D Total special deductions 15,000,000
38 Net estate 49,232,275
39 Less: Share of surviving spouse (1/2 x 40,479,271) 20,239,636
40 Net taxable estate P28,992,639

16 Net taxable estate P28,992,639

17 Applicable rate 6%

0 0
18 Estate Tax Due 1,739,558
19 Less: Tax credits/payments
19A Foreign estate tax paid -

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ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY TAX-101 Cases
Week 1: ESTATE TAX – ADDITIONAL CASES (Answers & Solutions)

19B Tax paid in return previously filed, if this is an amended return

19C Total -
20 Tax payable P 1,739,558
21 Less: Portion of tax allowed for payments by installment to be paid on or before
22 Tax payable
23 Add: Penalties
23A Surcharge
23B Interest
23C Compromise
24 Total amount payable P 1,739,558

Schedule 1 – Details of real property

OCT/TCT/ Tax Dec Improve FMV per BIR Conjugal/
CCT No. (TD) No. Location ment Area Classification FMV per TD (zonal value) Exclusive Communal
12345 23567 Masbate 300 sq. m Residential
City Regular P400,000 P 500,000 P 500,000
143443 67890 Quezon 500 sq.
City m. Commercial P12,000,000 15,000,000 15,000,000
Inherited 10,800,000
90756 Masbate 2,000 sq.
City m. Agricultural 10,500,000 - 10,500,000
15,000,000 21,800,000

Schedule 1A – Details of family home

OCT/TCT/ Tax Dec Location Area Classification FMV per TD FMV per BIR Exclusive Conjugal/
CCT No. (TD) No. (zonal value) Communal
78903 081156 Marikina City 400 sq. m. Residential P8,500,000 10, 500,000 10, 500,000
091189 Marikina City 500 sq. m. Residential 9,000,000 9,000,000

Schedule 2 – Personal properties (Shares of stock)

Name of Classification Stock certificate Fair market value/Book Conjugal/
corporation Listed/Not listed no. No. of shares value per share Exclusive Communal
ReSA Corp. Listed 001756 1,000 common 600,000 600,000

Schedule 2A – Other personal properties

Particulars Exclusive Conjugal/Communal
Bank deposit, Bank of Philippine Islands, income from the real property received as
gift by present decedent 500,000
Various personal properties acquired during the marriage 10,000,000
Automobile transferred in contemplation of death 500,000
Claims against a debtor who absconded 500,000
Total 11,000,000

Schedule 3 – Taxable transfers

Particulars (If cash in bank, indicate bank name and bank account no. Exclusive Conjugal/Communal
Proceeds of life insurance, beneficiary is revocably designated
1,500,000

Schedule 4 – Business interest such as net equity and others not classified above
Trade name or business Registered address RDO Code Exclusive Conjugal /Communal
name
None None None None
Schedule 5 – Ordinary deductions
Exclusive Conjugal/Communal
Claims against the estate 950,000
Claims of the deceased against insolvent persons
Unpaid mortgage, taxes and casualty losses 900,000
Losses during the settlement of the estate 1,300,000
Property previously taxed (vanishing deduction) 1,896,996 170,729
Transfer for public purpose
Others
Support of spouses to their common children and legitimate children of each spouse 100,000
Ante-nuptial debts of decedent that did not redound to the benefit of the family 50,000
Transfer to a social welfare institution mortis causa 300,000 -
Total 2,246.996 3,420,729
Computation of Vanishing Deduction
Commercial
building Residential land
Value to take 10,000,000 300,000
Less: Mortgage paid 0 0 - -
Initial basis 10,000,000 300,000
Less: Proportional deduction

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