Activity February 25, 2025
Transfer and Business Taxes
Problem 1
The heirs of a resident citizen decedent with a total gross estate of P15;000,000 provided the following data:
Receivable from Juan, a debtor 500,000
Amount collectible from Juan 400,000
Unpaid taxes on the estate before death 150,000
Unpaid taxes on the estate after death 50,000
Unpaid mortgage on the estate 200,000
Funeral expenses 82,000
Unpaid loans arising from debt instruments (notarized) 125,000
Unpaid loans arising from debt instruments (not notarized). 75,000
Casualty loss 65,000
REQUIRED: Determine the total amount of allowable deduction from gross estate of the decedent including
applicable special deduction.
Problem 2
Various types of losses were incurred by a decedent/estate as follows:
Loss due to typhoon, a day before the decedent's death, P1,000,000.
Loss due to shipwreck, two (2) months after the decedent's death, P500,000.
Loss due to robbery, eight (8) months after the decedent's death, P2,000,000.
Swindling loss incurred 2 months before death, 800,000
Gambling losses before death, P2,250,000
REQUIRED:
Question #1: How much is the deductible "losses" from the gross estate of the decedent?
Question #2: How much is the deductible "losses" from the gross estate of the decedent assuming the
robbery loss was incurred 1½ years after the decedent's death?
Problem 3
The following data were taken from the estate of Pedro:
Claims against Juan (insolvent), P100,000, fully uncollectible.
Claims against Manuel (insolvent), P200,000, 50% collectible.
Claims against a person who absconded, R300,000.
REQUIRED: Based on the data provided, determine the allowable deduction from Pedro's gross estate.
Problem 4
The gross estate of Juan includes P200,000 receivables which is duly notarized from a debtor (Pedro) whose
records show:
Assets P400,000
Liabilities 800,000
Pedro's liabilities composed of the following:
Due to the BIR for unpaid taxes, P200,000
Due to other creditors, P400,000
Due to Juan, P200,000
REQUIRED: Determine the amount of allowable deduction from Juan's gross estate in relation to its
receivable from Pedro.
Problem 5
Juan, a Filipino residing in Davao died on December 10, 2023, leaving a gross estate of P45,000,000 including
a parcel of land valued at P11,250,000, which he inherited from his father who died on October 5, 2020; that
the land was previously taxed with a fair value of P9,375,000 for estate tax purposes in the estate of his father;
that the land was subjected to a mortgage of P4,687,500 at the time it was inherited by the present decedent,
which amount was deducted from the net estate of the father; that the present decedent paid P1,875,000 of
the mortgage indebtedness and that the total deductions claimed for expenses, losses, including the unpaid
mortgage of P2,812,500 was P5,625,000.
REQUIRED: Determine the correct amount of vanishing deduction, if any.
