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Practice Exercises No. 3, 4, and 5

1. This document provides practice exercises on calculating gross estate for Philippine estate tax purposes. It gives details of properties owned and income sources for a decedent named Fatima, both resident and non-resident. 2. Additional exercises provide scenarios to determine whether certain transactions and property relations between spouses would be included in the gross estate. Details are given about properties, incomes, and inheritance for a decedent named Marvin who was married under an absolute community property regime. 3. The document aims to help students practice calculating gross estate, which involves determining what assets and transactions are included, for different circumstances of residency, donations, retained interests, and marriage property regimes.

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Ei Ar Taradji
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262 views3 pages

Practice Exercises No. 3, 4, and 5

1. This document provides practice exercises on calculating gross estate for Philippine estate tax purposes. It gives details of properties owned and income sources for a decedent named Fatima, both resident and non-resident. 2. Additional exercises provide scenarios to determine whether certain transactions and property relations between spouses would be included in the gross estate. Details are given about properties, incomes, and inheritance for a decedent named Marvin who was married under an absolute community property regime. 3. The document aims to help students practice calculating gross estate, which involves determining what assets and transactions are included, for different circumstances of residency, donations, retained interests, and marriage property regimes.

Uploaded by

Ei Ar Taradji
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Ateneo de Zamboanga University

School of Management and Accountancy


AccTax3 – Strategic Tax Management

Ar-Rashid J. Taradji, CPA, JD

NOTE: Each practice exercise is equivalent to one (1) recitation grade.

Practice Exercise No. 3


Gross Estate

Fatima, a decedent, single, left the following properties:

Vacation house in Hong Kong P1,200,000


Land in Zamboanga City 80,000
House in Daet, Camarines Norte 3,000,000
Apartment in New York, USA 4,500,000
Car in Hongkong 700,000
Car in the Philippines 650,000
Jewelry in New York, USA 125,000
Franchise exercised in New York 300,000
Franchise exercised in Hong Kong 260,000
Franchise exercised in the Philippines 380,000
Accounts Receivable, debtor residing in the Philippines 275,000
Accounts Receivable, debtor residing in New York 240,000
Accounts Receivable, debtor residing in Hong Kong 385,000
Investment in Lovers Co., partnership established in New 730,000
York
Investment in Mahalia Co., partnership established in the 300,000
Philippines
Investment in Sing Kaw Kaw Co., partnership established 245,000
in Hong Kong
Domestic shares, certificate kept in the Philippines 140,000
Domestic shares, certificate kept in New York City 250,000
Foreign shares, 90% of business in the Philippines 100,000
Foreign shares, 30% of business in the Philippines, but 270,000
acquired business situs in the Philippines
Foreign shares, 60% of business in the Philippines 425,000
TOTAL 14,555,000

Compute the gross estate if Fatima is a:


1. Resident or Citizen
2. Non-Resident Alien (no reciprocity)
3. Non-Resident Alien (with reciprocity)
Practice Exercise No. 4
Inclusions in Gross Estate

1. Pedro, decedent, owns a property valued at P1,500,000 at the time of his


death. The said property was sold by Pedro during his lifetime to Juan for
P700,000 when its value was P1,200,000. It was agreed by Pedro and Juan
that the former will enjoy the income of the property as long as he lives.
a. For Philippine estate tax purposes, how much will be included in
determining gross estate.
b. If the fair market value of the property at the time of death was only
P600,000, how much will form part of the gross estate?

2. Atong donated real property worth P500,000 to Bardagol during his lifetime.
An item in the deed, however, grants the donor the right to revoke the
donation at will.
a. Is the P500,000 subject to donor’s tax or to estate tax?
b. Suppose the deed of donation contains a condition that Atong could
reacquire only the land upon the giving of a 30-day notice to
Bardagol, is the donation subject to donor’s tax or to estate tax?
Explain.
c. Suppose that Atong found out one day that he had a terminal cancer
and had only 6 months to live, he then relinquished his right to revoke
under the donation for a consideration of P1.00. Does this subject now
the donation to donor’s tax instead of estate tax? Explain.
Practice Exercise No. 5
Property Relations Between Spouses

Marvin, Filipino, married to Julia on February 10, 2005, died during the current
year leaving the following properties:

Riceland bought by Marvin in 2007 P200,000


Income of the Riceland 35,000
House and lot which he brought into the marriage 800,000
Income of a portion of the house being leased to 26,500
student boarders
Subdivision lot inherited by Marvin from his father in 350,000
2007
Rent income of the subdivision lot 12,000
Coconut land inherited by Julia from her father who 250,000
died in September 1995
Income from the coconut land 15,000
Passenger jeepney given as birthday gift to Julia by 160,000
her mother in 2007
Income of the jeepney 8,000
Jewelry 50,000
Savings deposit in a bank earned by the spouses 875,000
during the marriage
Interest on the bank deposit, net of tax 3,500
½ share of Marvin in the time deposit with PNB 200,000

The entire deposit had earned an interest 6,000

The money was acquired by Marvin and Bebang, his


former wife, who died in 2003. Their marriage was
blessed with one child, Jade.

Compute the gross estate of Marvin if the marriage was under the absolute
community of property regime.

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