Mindanao State University

College of Business Administration and Accountancy

Department of Accountancy

Prelim Examination
Business Taxation – ACT 184

Problem 1
The decedent was married at the time of death:
Cash owned by the decedent before the marriage P 5,000,000
Real property inherited by the decedent during the marriage 5,000,000
Personal property received by the wife as a gift before the marriage 400,000
Property acquired by the decedent with cash owned before the marriage 600,000
Clothes of the decedent, purchased with the exclusive money of the wife 500,000
Jewelry purchased with the exclusive cash of the decedent 1,000,000
Property unidentified when and by whom acquired 1,200,000
Cash – income during the marriage 2,000,000
Jewelry acquired using the common fund for the exclusive use of the
decedent 200,000
Cash in bank representing income received before the marriage from an
exclusive property 100,000
Real properties acquired by the decedent while married to his first wife who
predeceased him 300,000

1. How much is the exclusive gross estate, if the spouses were under the system of conjugal
partnership of gains?
2. How much is the conjugal gross estate, if the spouses were under the system of conjugal
partnership of gains?
3. How much is the community gross estate, if the spouses were under the system of absolute
community of property?
4. How much is the exclusive gross estate, if the spouses were under the system of absolute
community of property?

Problem 2
Date of death was March 5, 2018.
Real property in Manila inherited from the father two and one-half years ago
and before the marriage, with a fair market value at that time of P2,000,000 P 1,500,000
Real property in Quezon City acquired during the marriage 4,000,000
Cash remaining of P500,000 proceeds from the sale of personal property
(Property received within the year as a gift with a value of P200,000, with an
unpaid purchase price of P100,000, assumed by the decedent. The unpaid
price was paid out of the proceeds of the sale.) 400,000
Cash from the earnings of the wife 600,000
Personal properties acquired through own labor 400,000
Clothes of the surviving spouse, purchased with income during marriage 600,000
Mortgage payable on the real property in Manila, from a mortgage on the
property of P800,000 when inherited 500,000
Funeral expenses (paid of P160,000 and unpaid of P140,000) 300,000
Medical expenses on last illness two weeks before death (paid of P180,000
and unpaid of P300,000) 480,000
Other obligations 497,000
Claim against insolvent person 100,000
Payments to the lawyer assisting the settlement of the estate:
Acceptance fee, April 5, 2018 100,000
Appearance in court, June 16, 2018 3,000
Appearance in court, October 15, 2018 3,000
Appearance in court, December 2, 2018 3,000

Determine the following:

5. Total exclusive properties, if the spouses were under the conjugal partnership of gains
6. Total conjugal properties, if the spouses were under the conjugal partnership of gains
(From 7-14, supposed that the spouses were under Absolute community of property)
7. Total exclusive properties
 8. Total community properties
9. Total vanishing deduction
10. Total exclusive deductions
11. Total special deductions
12. Net taxable estate
13. Estate tax payable
14. Net distributable estate

Problem 3
Mr. Z, a citizen and resident of the Philippines, died with data on community (of which P850,000 is a
family home) in the Philippines, exclusive properties in Country M and Country N, charges thereon, and
foreign estate taxes paid, as follows:
Philippines Country M Country N
Gross estate P 6,000,000 3,000,000 3,000,000
Unpaid mortgage 100,000 100,000
Other charges 400,000 225,000 1,000,000
Estate tax paid 15,000 5,000

Determine the following:

15. Estate tax before tax credit
16. Estate tax credit
17. Estate tax payable after foreign tax credit

Problem 4
Mr. Y, an American, single and residing in USA, died in June 2018 leaving the following:
Land in Makati P 2,000,000
Land in Manila 3,000,000
Gross Estate, USA 5,000,000
Deductions claimed by the estate:
Claims against estate 120,000
Transfer of the land in Makati to the Philippine Government (in decedent’s will) 2,000,000
• The land in Manila when inherited 3 ½ years ago had a value of P2,400,000 with a
mortgage thereon of P400,000 which was paid prior to Mr.Y’s death.
• The land in Makati, when inherited 4 ½ years ago had a value of P1,500,000.

Determine the following:

18. net estate subject to estate tax.
19. Estate tax payable

Problem 5
Mr. and Mrs. Lapu-lapu, made the following data:

02/25/2019 To Magellan, their legitimate son, on account of marriage last 1/20/2018, car worth
P400,000 with P200,000 mortgage, ½ was assumed by the donee
04/14/2019 To Napoleon, brother of Mr. Lapu-lapu, his capital property worth P400,000 on
account of marriage 6 months ago with a condition that the done will pay the
donor’s tax thereon
07/03/2019 To Donita, daughter of Mrs. Lapu-lapu by former marriage, on account of her
marriage 12 months ago, Mrs. Lapu-lapu paraphernal property worth P600,000
08/17/2019 Conjugal car of the couple worth P400,000 with P200,000 unpaid mortgage, ½
assumed by Donita. And P500,000 worth of land to their four sons on account of
their graduation, 20% of which was owned by their kumpare who agreed to donate
his share thru a public document

Determine the donor’s tax payable:

20. Of Mr. Lapu-lapu on 04/14/2019
21. Of Mrs. Lapu-lapu on 07/03/2019
22. Of Mr. Lapu-lapu on 08/17/2019
23. Of their kumpare on 08/17/2019
Problem 6
A made the following transfers inter-vivos:
To B To C To D To E
Cost P 100,000 P 100,000 P 100,000 P 100,000
FMV, time of transfer 140,000 100,000 100,000 80,000
Consideration received 100,000 140,000 80,000 10,000
FMV time of death 120,000 200,000 70,000 90,000

24. The amount to be included in the gross gift of A is?

Problem 7
A non-citizen residing in Japan with a legitimate son and legitimate daughter, made the following
donations/transactions:
Donation on account of marriage of legitimate son P 180,000
Donation on account of marriage of legitimate daughter 150,000
Donation to legitimate son 100,000
Sold his personal car in Japan valued at P500,000 to her uncle 200,000
Sold his mango farm to a close friend, FMV, time of sale is P800,000 600,000
Donation to a legitimate daughter 120,000
Gave a gold ring to his wife as a birthday gift to her 50,000
Donation on account of marriage, to legitimate son 140,000
Donation to IRRI 20,000
Donation to a legitimate daughter of property with an assumption by the 150,000
daughter of a P50,000 indebtedness of a property
Donation of an exclusive antique jewelry situated abroad to a daughter who 150,000
graduated cum laude.
Donation to Quezon city for public use 100,000
Donation to the government of Japan 50,000
Gifted his wife a diamond ring on occasion of her birthday 20,000
Donor’s tax paid in Japan 4,000

Determine the following:

25. Total gross gift
26. Total deduction on gross gift
27. Donor’s tax still due and payable

Problem 8
A decedent left the following properties:
Land in Italy ( with P1M unpaid mortgage) P2,000,000
Land in Laguna, Philippines 500,000
Franchise in USA 100,000
Receivable from debtor in Philippines
70,000
Receivables from debtor in USA 100,000
Bank deposits in USA 80,000
Shares of stocks of PLDT, Philippines
75,000
Shares of stock of ABC, foreign corporation, 75% of the business in Philippines
125,000
Other personal properties 300,000
Zonal Value of the land in Laguna 750,000

Determine the net estate subject to estate tax.

28. Non-resident citizen
29. Non-resident alien without reciprocity
30. Non-resident alien with reciprocity

Problem 9
The decedent, a married man with a surviving spouse under conjugal partnership of gains, with the
following data died on March 1, 2018:
Real Properties
Family lot acquired by the decedent before marriage, FMV P 500,000
Family house built using the salary earned by the surviving spouse during the
marriage, FMV 900,000
Coconut farm inherited by surviving spouse during the marriage, FMV 100,000
Mango orchard, FMV 800,000
Personal Properties
Bank deposit under the name of the decedent representing salary earned
before marriage 2,150,000
Gold necklace inherited by the surviving spouse during the marriage 120,000
Several pieces of jewelry acquired during the marriage using the exclusive
money of decedent 300,000

The following expense/ deductions are claimed:

Funeral expense 100,000
Judicial expense 120,000
A piece of jewelry theft on August 15, 2018 50,000
Gambling debts of the decedent 70,000
Unpaid realty tax (coconut farm) for the 3 quarters of 2018 150,000
Claims against an insolvent debtor (25% can be collected) 80,000
Medical expenses 600,000

Determine the following:

31. Conjugal properties
32. Exclusive properties
33. Total ordinary deductions
34. Net taxable estate
35. Estate tax still due