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Ae 208 Bustax Problem

This document contains 4 estate tax problems involving individuals who have died. It provides the gross estate amounts and any deductions to calculate the net taxable estate and resulting estate tax for each individual. Standard deductions and exemptions for things like family homes and unpaid taxes are taken into account. Calculations are shown for items like vanishing deductions when inherited property appreciates.

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Paulo Oronce
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252 views3 pages

Ae 208 Bustax Problem

This document contains 4 estate tax problems involving individuals who have died. It provides the gross estate amounts and any deductions to calculate the net taxable estate and resulting estate tax for each individual. Standard deductions and exemptions for things like family homes and unpaid taxes are taken into account. Calculations are shown for items like vanishing deductions when inherited property appreciates.

Uploaded by

Paulo Oronce
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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ORONCE PAULO P.

BS Accountancy 2-D
College of Business Administration AE 208 Business Taxes
PROBLEM SOLVING

Mr. Juan, a single, a citizen and resident of the Philippines, a head of family, leaving
a family home of Php9,500,000, Cash in bank of Php3,000,000 and Car of
Php2,500,000. There is a receivable of Php400,000 from a debtor who has not enough
properties to pay all his obligations. The debtor properties can only pay ¼ of the
obligation. Compute the estate tax of Mr. Juan. (10 points)

Gross Estate:
Family Home P9,500,000
Personal Properties:
Cash 3,000,000
Car 2,500,000
Receivable 400,000. 5,900,000
GROSS ESTATE. 15,400,000
Deductions
Ordinary Deduction
Claims against insolvent persons (300,000)
Special Deduction
Family Home. 9,500,000
Standard Deduction 5,000,000. (14,500,000)
NET TAXABLE ESTATE 600,000
Estate Tax Rate @ 6%. 36,000

2. Mr. Tank died leaving a gross estate of Php10,000,000. He borrowed Php150,000


from a friend and executed a promissory note but unfortunately forgot to notarized.
Before he died, he was not able to pay the real property tax amounting to
Php20,000. Compute the estate tax of Mr. Tank. (10 points)

Gross Estate 10,000,000


Deductions
Ordinary Deduction
Unpaid Property Tax (20,000)
Special Deduction
Standard Deduction. (5,000,000)
NET TAXABLE ESTATE 4,980,000
Estate Tax Rate @ 6% 298,800

Mr. Ebenezer D. Gener, CPA


Professor
ORONCE PAULO P.
BS Accountancy 2-D
College of Business Administration AE 208 Business Taxes

3. Mr. Happy , a citizen and resident of the Philippines, a head of the family, died
leaving a family home of Php15,000,000 together with agricultural land of
Php5,000,0000. Before he died, in the preceding year, he was not able to pay his income
tax worth Php130,000. He borrowed Php500,000 from a friend and executed a
promisory note, payable within ninety days from the date of issue, and had it
notarized. He died the day after he executed the promisory note. The proceeds of the
note were certified by the administrator of the estate as used for family expenses. He
also inherited a piece of land from his father with a fair market value of Php10,000,000
when inherited. After, four and half years later, Mr. Happy died with still the same
piece of land, at this time with a fair market value of Php11,300,000. Compute the estate
tax of Mr. Happy. (10 points)

Gross Estate
Family Home P15,000,000
Real Properties 16,300,000
GROSS ESTATE 31,300,000
Deductions
Ordinary Deduction
Unpaid Income Tax. (130,000)
Claims Against the Estate (500,000)
Vanishing Deduction (1,959,744)
Special Deductions
Family Home (10,000,000)
Standard Deductions (5,000,000)
NET TAXABLE ESTATE 13,710,256
Estate Tax Rate @ 6%. 822,615

Vanishing Deduction Computation:


Initial Basis 10,000,000
(IB/GE) x (LITe+TFPU) 201, 278
Final Basis 9,798,722
Rate 20%. .
Vanishing Deduction. (1,959,744)

Mr. Ebenezer D. Gener, CPA


Professor
ORONCE PAULO P.
BS Accountancy 2-D
College of Business Administration AE 208 Business Taxes

4. Mr. Asher, a resident and citizen of the Philippines died, leaving the following estate
to the surviving spouse Angela: Family home (conjugal property) – Php12,000,000; Car
(exclusive property of Mr. Asher) – Php2,000,000; Land and Building (conjugal
property) – Php8,000,000; Conjugal ordinary deductions – Php500,000. Compute for
the estate tax of Mr. Asher. (10 points)

Gross Estate Exclusive Conjugal Total


Family Home - 12,000,000. 12,000,000
Real Property - 8,000,000 8,000,000
Personal Property 2,000,000. - 2,000,000
GROSS ESTATE 2,000,000. 20,000,000. 22,000,000
Deductions
Ordinary Deductions
Conjugal Deductions. (500,000) (500,000)
NET CONJUGAL ESTATE 19,500,000
Special Deductions
Family Home (6,000,000)
Standard Deduction (5,000,000)
NET ESTATE. 10,500,000
Deductions on share of surviving Spouse
Conjugal Property. 20,000,000
Conjugal Deductions (500,000)
Net Conjugal Estate. 19,500,000
½ of net conjugal estate (9,750,000)
NET TAXABLE ESTATE 750,000
Estate Tax Rate @ 6%. 45,000

Mr. Ebenezer D. Gener, CPA


Professor

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