MODULE 12

GROSS ESTATE

2. Which of the following may be the subject of succession?

(a) Properties
(b) Rights
(c) Obligations
(d) All of the above

3. Statement 1. The estate tax is imposed on the privilege of a person to transmit his properties
upon his death.
Statement 2. The inheritance tax is imposed on the privilege of a person to receive the
properties of the person who died.
(a)True, true (b) False, false (c) True, false (d) False, True

4. Statement 1. The estate tax is a tax on property (a property tax).

Statement 2. The estate tax is a tax on privilege (a excise tax).
(a)True, true (b) False, false (c) True, false (d) False, True

5. Statement 1. The estate tax is an excise tax on a person for transmitting his properties upon
his death.
Statement 2. The donor’s tax is an excise tax on a person for transmitting his properties
effective while still alive.
(a)True, true (b) False, false (c) True, false (d) False, True

6. Statement 1. The estate tax accrues upon the death of the decedent owner of the properties
transmitted by succession.
Statement 2. The estate tax should be paid by the executor or administrator or the heir, before
title to any registerable property may be registered in the name of the heir to whom it is given
by succession.
(a)True, true (b) False, false (c) True, false (d) False, True

11. The property, rights and obligations of a person which are not extinguished by his death and
those which have been accrued thereto since the opening of succession
(a) Assets
(b) Capital
(c) Estate
(d) Income
12. Which of the following is not subject to estate tax?

(a) A succession to the property of a decedent who left no last will and testament.
(b) A donation mortis causa
(c) A donation inter vivos
(d) A transfer during the lifetime for less than full land adequate consideration.

13. Which of the following statements is wrong?

(a) The gross estate of a non-resident citizen would include all properties regardless of
location.
(b) The gross estate of a non resident, not a citizen of the Philippines would include
intangible properties in the Philippines.
(c) The gross estate of a resident, not citizen of the Philippines would include all properties
regardless of location.
(d) The gross estate of a non-resident citizen of the Philippines would include only properties
in the Philippines.

14. The personal properties of a non-resident, not citizen of the Philippines, would not be
included in the gross estate if:

(a) The intangible personal property is in the Philippines

(b) The intangible personal property is in the Philippines and the reciprocity clause of the
estate tax law applies.
(c) The tangible personal property is in the Philippines
(d) The personal property is shares of stock of a domestic corporation 90% of whose
business is in the Philippines.

15. Mr. A, a resident citizen died on the United States leaving the following properties:
Real properties in the United States,
Family home in the Philippines.
Office condominium in the Philippines
Shares of stock of a domestic corporation
Cash in Bank
Personal belongings without any obligation
Statement 1. His gross estate shall include all the properties
Statement 2. . His gross estate shall include only the properties in the Philippines.

(a)True, true (b) False, false (c) True, false (d) False, True
1. Mr. V, a subject of a foreign country, residing in the Philippines, died with the following
properties:
Shares of stock of a domestic corporation
Condominium unit in Metro Manila
House and lot in his home country

Statement 1. His gross estate shall include all the properties.

Statement 2. His gross estate shall include only the properties in the Philippines.
(a)True, true (b) False, false (c) True, false (d) False, True

2. Mr. W, an American residing in Taipeh, died leaving the following properties

Real property in the United States
A resort in Italy
Shares f stock in a Taipeh corporation with a business in Taipeh only
Shares f stock of a Taipeh corporation, operating in , and with office at the Philippines
Time deposit with a Philippine bank
Philippine Treasury bills
Lease contract on his real property in the United States, leased to the Philippine consulate.

Statement 1. His gross estate shall include all the properties

Statement 2. His gross estate shall include only the properties in the Philippines.
(a)True, true (b) False, false (c) True, false (d) False, True

3. Mr. D owned one hundred hectares of agricultural land. The Government took nine hundred
ninety-five hectares under the Agrarian Reform Act, with payment for it not yet received. Mr.
D died. What value shall be included in his gross estate?
(a) One hundred hectares of agricultural land
(b) Five hectares of agricultural land plus the amount receivable from the Government on the
appropriation of ninety-five hectares
(c) Five hectares of agricultural land
(d) None

1. Proceeds of life insurance includible in the taxable gross estate

(a) Insurance proceeds from SSS or GSIS
(b) Amount receivable by any beneficiary irrevocable, designated in the policy by the
insured.
(c) Amount receivable by any beneficiary designated in the insurance policy
(d) Proceeds of group insurance taken out by a company for employees.

2. Which statement is correct?

(a) Proceeds of accident insurance paid by the insurance company directly to a revocably
designated beneficiary is part of the gross estate of the decedent.
 (b) Proceeds receivable under life insurance taken out by the decedent on his own life with
wife as revocable beneficiary, with a loan taken by the decedent on it, is includible in the
gross estate at its value, net of the loan on it.
(c) Proceeds of property insurance receivable when the decedent was still alive is part of the
gross estate
(d) Proceeds of group insurance secured by the employer when the revocable beneficiary is
the wife, is part of the gross estate.

3. Proceeds of a life insurance policy taken out by the decedent on his own life are includible in
the gross estate if the beneficiary is:
(a) The estate, whether the designation of is revocable or irrevocable
(b) The executor or administrator, whether the designation is revocable or irrevocable
(c) A third person and the designation is revocable.
(d) A third person and the designation is irrevocable.
Which is wrong?

4. For death of a father in an airplane crash, the children received insurance proceeds of P 350,
000 by the insurer and airplane
Statement 1. The P 350, 000 shall be included in the gross estate because it was receivable at
the time of death.
Statement 2. The P 350, 000 shall not be included in the gross estate because the life
insurance was not taken out by the decedent himself on his own life.

(a)True, true (b) False, false (c) True, false (d) False, True

5. The widow of Mrs. A received P 500, 000 under a life insurance of her husband. Should the
proceeds of life insurance be included in the gross estate?
(a) Yes, if the estate, executor or administrator of Mr. A was designated as beneficiary.
(b) Yes, if Mrs. A was designated as revocable beneficiary.
(c) Yes, if Mrs. A was designated as irrevocable beneficiary.
(d) Yes, it was Mrs. A who insured even if the designation was iirevocable.
Which statement is wrong?

6. Which statement is wrong? The gross estate shall be valued:

(a) At its fair market value at the time of death
(b) At its fair market value at the time the return is due
(c) If real property, the zonal value, which may be higher than the fair market value
(d) In the case of shares of stock, at book value.
 7. Which statement is correct? Real property with a cost of P 300, 000 and a fair market value at
the time of death of P 1, 000, 000 but subject to a mortgage of P 200, 000
(a) Shall be in the net taxable estate at P 800, 000
(b) Shall be in the gross estate at the decedent’s equity of P 800, 000
(c) Shall be in the gross estate at P 300, 000
(d) Shall be in the gross estate at the owner’s equity of P 100, 000

8. Mr. Q a provided in his last will and testament that the properties he would leave should not
be sold or disposed of for a period of 10 years after his death, and that his property be given
to Mr. Q after such period. The value of the properties increased from P 2,000,000 at the time
of death to P 3, 000, 000 ten years after death. Which statement is correct?
(a) The Commissioner of Internal Revenue shall assess the estate tax on a value of P
1,000,000
(b) The Commissioner of Internal Revenue shall assess the estate tax on a value of P
3,000,000

29. In the last will and testament, a decedent provided that the properties he leaves should not be
sold or disposed of for ten years following his death. He had real estate in his gross estate as
follows:
At the time of death - zonal value of ₱ 500,000
At the end of ten years after the death:
Fair Market Value - ₱ 2,500,000
Declared value in estate tax return - ₱ 1,500,000
Zonal value - ₱ 3,000,000
What value shall be used for purposes of estate tax?
(a) ₱3,000,000 (b) ₱1,500,000 (c) ₱2,500,000 (d) ₱500,000

30. Mr. D owned one hundred hectares of agricultural land. The Government took ninety-five
hectares under Agrarian Reform Act, with payment for it not yet received. Mr. D died. What
value shall be included in his gross estate?
(a) One hundred hectares of agricultural land;
(b) Five hectares of agricultural land plus the amount receivable from the Government on the
appropriation of the ninety-five hectares;
(c) Five hectares of agricultural land;
(d) None.

31. The gross estate shall include properties not physically in the estate, if such properties is
transferred by the decedent during his lifetime by way of:
(a) Transfer in contemplation of death;
 (b) Revocable transfer
(c) Transfer under general power of appointment.

32. Statement 1: A donation inter vivos is subject to estate tax.

Statement 2: A donation mortis causa is subject to estate tax.
(a) True, true;
(b) False, false;
(c) True, false;
(d) False, true.

33. Mr. D with stage three cancers, made a last will and testament disposing of properties
mentioned in the last will and testament. On the same day, he made gifts inter vivos to his
children. A few days later he died. Are the donated properties to be included in the gross estate?
(a) No, because they were not his properties anymore at the time of his death;
(b) Yes, because the donation were donation mortis causa, and should be should be governed
by the rules on estate tax.
(c) No, if the donors tax has been paid already on the donations;
(d) No, because they were not transfers in contemplation of death, since the transfers in
contemplation of death was contemporaneous last will and testament.
34. Which of the following is not included in the gross estate?
(a) Recoverable transfer where the consideration is not sufficient;
(b) Recoverable transfer where the power of revocation was not exercised;
(c) Transfer under a general power of appointment where the consideration is not sufficient;
(d) Transfer under a limited power of appointment.

35. Mr. N died leaving a painting to his son Mr. O by last will and testament. The will of Mr. N
give Mr. O the power to appoint by will Mr. P as successor of the painting. When Mr. O died,
Mr. P succeeded to the property. Which answer is wrong?
(a) The value of the painting should be included in the gross estate of Mr. N.
(b) The value of the painting should be included in the gross estate of Mr. O.
(c) The value of the painting should be not included in the gross estate of Mr. O.
(d) Mr. P is succeeding to the estate of Mr. N not Mr. O.

36. A revocable transfer with the following circumstances: Fair market value at the time of transfer
- ₱300,000; Fair market value at the time of death - ₱180,000; consideration received when
transferred - ₱200,000;
(a) Shall be included in the gross estate at ₱180,000.
(b) Shall be included in the gross estate at ₱200,000.
(c) Shall be included in the gross estate at ₱100,000.
(d) Shall be not be included in the gross estate.

37. A revocable transfer with a consideration received;

 Consideration received ₱200,000
Fair market value of the property at the time of transfer 300,000
Fair market value of the property at the time of death 250,000
Value to include in the gross estate:
(a) ₱300,000 (b) ₱250,000 (c) ₱100,000 (d) ₱50,000

38. Which of the following is not true: A transfer in contemplation of death for less than full or
adequate consideration in money may result in a:
(a) Value included in a gross estate.
(b) Nothing included in a gross estate.
(c) Value included in a net estate.
(d) Value to consider a taxable income.

39. The following acquisitions and transmission are exempt from the estate tax;
(a) The merger of the usufruct in the owner of the naked title.
(b) The transmission or the delivery of the inheritance or legacy of the fiduciary heir or legatee
to the fideicomissary;
(c) The transmission of the first heir, legatee or donee in favor of another beneficiary in
accordance with the will of the predecessor;
(d) All bequests, devises or transfers to social welfare, cultural and charitable institution no
part of the net income of which inures to the benefit of the individual; Provided, that not
more than thirty percent (30%) of said bequest, devises or transfers shall be used by such
institutions for administrative purposes.

40. The following transactions and acquisitions are exempt from the transfer tax except;
(a) The transmission of the first heir or donee in favor of another beneficiary in accordance
with the desire of the predecessor;
(b) The transmission or the delivery of the inheritance or legacy of the fiduciary heir or legatee
to the fideicomissary;
(c) The merger of the usufruct in the owner of the naked title.
(d) All bequests, devises or transfers to social welfare, cultural and charitable institution.

41. Which of the following shall not be taxed?

(a) Amounts received for war damages;
(b) Amounts received from United States Veterans Administration;
(c) Benefits Received from the Government Service Insurance System;
(d) Benefits Received from the Social Security System
(e) All of the above

42. Fair market value Consideration

At transfer at death received
Recoverable Transfer
Land ₱4,000,000 ₱5,200,000 ₱3,000,000
Car 1,000,000 0 600,000
Shares of stock 500,000 300,000 400,000
Bonds 200,000 200,000 250,000
Transfer under power of appointment:
Land and Building, General power 2,000,000 1,800,000 1,000,000
Farmland, limited power 1,500,000 500,000 1,200,000
The gross estate is?
(a) ₱800,000 (b) ₱3,000,000 (c) ₱2,200,000 (d) some other
amount

43. A citizen and resident of the Philippines died leaving the following properties and rights:

Cash on hand and in banks ( of which P150,000 was provided

in the will to be given to a charitable institution)
P1,000,000
Real property in the Philippines:
Assessed value per assessment rolls of the city
100,000
Zonal value per Bureau of Internal Revenue 500,000
Selling price of adjacent piece of land the day preceding the date of death 600,000
Real property in Malaysia, fair market value 450,000
Car in the Philippines, with mortgage of P200,000 400,000
Receivables:
From a friend from whom there is no possibility of recovery 20,000
From a sister whose ratio of assets to liabilities is 1:3 15,000
Amount under insurance contracts:
Receivable under life insurance, with the father as revocable
beneficiary 250,000
Receivable under life insurance, with the mother as irrevocable
beneficiary 200,000
Receivable under life insurance, for the accident happened one year ago 50,000
Receivable under Property insurance, for damage caused to his car 12,000
Revocable transfer:
To sister (fair market value at the time of transfer was 40,000
and consideration received was 10,000 ) 50,000
To father (fair market value at the time of transfer was 30,000
and consideration was 30,000) 60,000
To mother (fair market value at the time of transfer was 40,000
and consideration was 50,000) 70,000

The gross estate is :

 (a) P 2,737,000 (b) P 2,807,000 (c) P 2,627,000 (d) P
1,350,000

44. The decedent was a resident decedent.

Properties left, at fair market values, were
Family home ( land and residential house) in the Philippines P 2,000,000
Piece of land with vacation house in Malaysia 1,500,000
Farm land in the Philippines, with a mortgage in favor of the
Philippine National Bank for P600,000 1,000,000
Shares of stock:
Of a domestic corporation deposited in a bank safety
Deposit box in Malaysia 200,000
Of a foreign corporation the entire business of which is in the Philippines
Deposited in a bank safety deposit box in Malaysia 100,000
Receivable from a friend who has no property whatsoever 50,000
Receivable under insurance policies
Life insurance policy, taken by the decedent on his own life, with his estate
as his revocable beneficiary 500,000
Life insurance policy, taken by the decedent on his own life, with a daughter
as his revocable beneficiary 400,000
Life insurance policy, taken by the decedent on his own life, with a son
as his irrevocable beneficiary 300,000
Life insurance (group), taken by the employer on the decedent, with the estate
as revocable beneficiary
50,000
Property insurance, for loss of property 250,000
Accident insurance, for injury sustained 20,000
The gross estate is?
(a) P5,920,000 (b) P5,020,000 (c) P 4,920,000 (d) P 6,020,000

45. A citizen of Malaysia, residing in Kuala Lumpur, with properties in Malaysia and Philippines,
had the following data on properties and rights at the time of his death and their values:
Real estate, Malaysia P1,000,000
Real estate, Philippines 2,000,000
Shares of stock of a domestic corporation 200,000
Shares of stock of a Malaysian corporation 300,000
Shares of stock of a Indonesian corporation, doing
business in the Philippines only 100,000
Philippine peso deposit in BDO bank 500,000
Receivable with a life insurance with insurance
 Company doing business in Malaysia 250,000
The gross estate that should be reported in the Philippines is:
(a) P4,350,000 (b) P3,700,000 (c) P4,000,000 (d) P 2,800,000

46. The decedent was a citizen of, and residing in, X foreign country, who left the following
properties (at fair market values):
Land in the Philippines P 1,000,000
Land and building in X foreign Country 2,000,000
Car in the Philippines 600,000
Shares of stock of a domestic corporation, with the certificate
In a foreign bank 700,000
Shares of stock of A Co., foreign corporation (with no business
In the Philippines) 200,000
Certificate of shares of stock, in a foreign bank:
Shares of stock of B Co., foreign corporation (90% of it’s
Business is in the Philippines) 500,000
Shares of stock of C Co., foreign corporation (85% of it’s
Business is in the Philippines) 400,000
The gross estate in the Philippines is?
(a) P1,600,000 (b) P0 (c) P600,000 (d) P1,000,000

47. Property relationship between husband and wife may be:

(a) Conjugal partnership of gains or relative community of property;
(b) Absolute community of property.

48. The decedent was married at the time of death.

Cash owned by the decedent before the marriage P5,000,000
Real property inherited by the decedent during the marriage 6,000,000
Personal property received by the wife as gift before the marriage 400,000
Property acquired by the decedent with cash owned before marriage 600,000
Clothes of the decedent, purchased with the exclusive money of the wife 500,000
Jewelry purchased through 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
Exclusive gross estate if the spouses were under the system of conjugal partnership of
gains?
(a) P11,600,000 (b) P10,600,000 (c) P 6,600,000 (d)
P12,600,000

Community gross estate if the spouses were under the system of absolute community of
property?
 (a) P10,200,000 (b) P8,200,000 (c) P 9,200,000 (d) P 7,200,000

49. Mr. B maintained a joint account with Mrs. B in a bank with the authority to withdrew either
by Mr. B or Mrs. B (“and/or account”). Mr. B died and the Bureau of Internal Revenue
included the cash in the bank in that account in the gross estate of Mr. B. Mrs. B objected on
the ground that t he account is not really a joint account, and the balance in the account was
allowed by the bank to be withdrawn already by Mrs. B.
Statement 1: The Bureau of Internal Revenue was correct. Joint properties (conjugal or
community) are includible in the gross estate of the person who died.
Statement 2: The bank was in error in allowing the withdrawal of the deposit if it had
knowledge of the death of Mr. B, and the Bureau of Internal Revenue shall not be precluded
from collecting the tax by the error of the bank.
(a) True, true;
(b) False, false;
(c) True, false;
(d) False, true.

50. With information from the obituary in a newspaper on the death of Mr. U, the Bureau of
Internal Revenue communicated with banks, asking them to give information on the bank
deposits of Mr. U. Can the bank give information on the bank deposits?
(a) Yes
(b) No