PAMANTASAN NG LUNGSOD NG MARIKINA

College of Management & Technology

Department of Business Administration and Entrepreneurship
Rainbow Street corner Sierra Madre St., SSS Village
Concepcion Dos, Marikina City

Business and Transfer Tax

Midterm Examination
2nd Sem SY 2025

I. MULTIPLE CHOICE
Objective: To assess the knowledge and understanding of students in estate taxation.
Direction: Encircle the letter corresponding to your best answer.

1. The common characteristics of transfer taxes is

A. The transfer of property is onerous.

B. The transfer takes effect during the lifetime of the transferor.
C. The transfer takes effect upon the death of the transferor.
D. The transfer of property is gratuitous.

2. The property, rights and obligation of a person which are not extinguished by his death
and those which accrued thereto since the opening of succession

A. Assets
B. Capital
C. Estate
D. Income

3. Estate tax is not a (an)

A. Excise tax
B. Direct tax
C. Property tax
D. Progressive tax

4. Donor’s tax as distinguished from Estate tax

A. Payment is made as return is filed

B. Notice is not needed
C. There is valuation date
D. Exemption is P250,000

5. This is not part of the gross estate of the decedent

A. Conjugal property
B. Community property
C. Share of surviving spouse
D. Exclusive property of the surviving spouse

6. Under the absolute community of property, jewelry for personal and exclusive use of the
wife shall belong to the

A. Wife
B. Husband
C. Husband and Wife
D. Children

7. The estate of citizen or resident decedent may claim a standard deduction of

A. P5,000,000
B. 2,000,000
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C. 200,000
D. 500,000

8. The gross estates include all his property, real and personal, tangible or intangible
wherever situated, except

A. Resident citizen
B. Non-resident citizen
C. Resident alien
D. Non-resident alien

9. For estate tax purposes, the estate of the decedent shall be valued at the time

A. of the preparation of the estate tax return

B. the estate tax is paid
C. of death of the decedent
D. the estate is distributed to the heirs

10. Benny Tai died leaving his daughter, Fina Tai, as sole heir to his residential house and
lot as his only property.

Which of the following is not an element of the succession on his property, if the
administratrix of his estate is Mama Tai?

A. Benny Tai
B. House and Lot
C. Fina Tai
D. Mama Tai

11. Inheritance does not include -

A. property
B. public office
C. rights not extinguished by death
D. obligations not extinguished by death

12. Estate tax is -

A. a property tax because it is imposed on the property transmitted by the decedent to his
heirs
B. an indirect tax because the burden of paying the tax is shifted on the executor or any
of the heirs of the decedent
C. an excise tax because it imposed on the privilege exercised to transfer ownership over
the estate
D. a poll tax because it is also imposed on residents of the Philippines whether Filipino
citizens or not

13. Which of the following is not a distinction between estate tax and donor’s tax?

A. The tax imposed is an excise tax

B. Extension for payment
C. Effectivity of the transfer of property
D. Period for the filing of return

14. The following are the motives of a taxpayer that preclude the transfer in contemplation
of death, except one

A. To relieve the taxpayer of the burden of management

B. To save income and property taxes
C. To avoid payment of estate tax
D. To make dependents financially
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15. In 2005, J Cruz gave a loan of P150,000 to Sexy, his secretary. In 2018, as an act of
generosity, J. Cruz condoned the debt of Sexy in his last will and testament. J. Cruz died
in 2021. The condonation of the debt of Sexy is

A. A donation inter vivos subject to donor’s tax

B. A payment or compensation for the services rendered
C. A deduction from the gross estate of J. Cruz
D. A donation mortis causa subject to estate tax.

16. In default of testamentary heirs, the law determines who are to succeed to the inheritance
of the deceased. Which of the following ranks first in the order of succession?

A. legitimate children C. legitimate parents

B. surviving spouse D. illegitimate children

17. Ulyanov Kerivsky, Ukranian, died in the Philippines. The properties situated in his own
country will not be subject to estate tax in the Philippines if he was a -

A. Resident citizen
B. Resident alien
C. Nonresident citizen
D. Nonresident alien

Items 18 through 20 are based on the following information:

Dina Mathay, Filipina, died in the United States with following properties:

Condominium unit in New York City P2,000,000

Shares of stock in a foreign corporation 600,000
Interest in a partnership, domestic 475,000
Bank deposit in a New York City bank 150,000
Car in Cebu, donated inter vivos 5 years ago to her son 500,000

18. Which property should be included in her gross estate?

A. All of the above properties

B. Only the properties located in the Philippines
C. All the above properties except the car
D. The properties located in the Philippines except the intangibles

19. If the decedent was a nonresident alien (no reciprocity), how much is the gross estate?

A. P3,725,000 C. P500,000
B. 975,000 D. 475,000

20. If the decedent was a nonresident alien (with reciprocity), how much is the gross estate?

A. P3,725,000 C. P500,000
B. 975,000 D. None

21. Which of the following is an intangible personal property within?

A. Franchise exercised in the United States

B. Shares or rights in a domestic business partnership
C. Bonds issued by an American corporation
D. Stocks issued by foreign corporation with business situs in the Philippines

A. B only C. All of the above properties

B. B and D D. None of the above properties

22. An example of Intangible personal property without is

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A. Domestic shares of stock

B. Foreign shares, 85% of the business of the corporation is in the Philippines
C. Foreign shares with business situs in the Philippines
D. Foreign shares, certificate of stock are kept in Makati

23. Decedent Jose Manalo had the following data:

Value of the property at the time of sale P1,200,000

Value of consideration when sold 1,000,000
Value of property at the time of death 1,500,000

The amount includible in the gross estate is -

A. P300,000 C. P200,000
B. 500,000 D. 1,500,000

24. Proceeds of life insurance not payable to estate, executor or administrator shall be
excluded in the gross estate if the beneficiary appointed in the policy is -

A. Revocable C. Irrevocable
B. Revocable or irrevocable D. the executor

25. One of the following is included in the gross estate

A. Benefits received from GSIS

B. Benefits received from U.S. Veterans Administration
C. Benefits received from damages during World War 2
D. Benefits received from a tax-exempt employer as a consequence of death of the
employee

26. Which of the following distinguishes conjugal property from community property?

A. Properties inherited during marriage

B. Those acquired through occupation during marriage
C. Fruits of property acquired thru donation during the marriage
D. Income earned by each spouse during the marriage

27. Malakas is married to Maganda. From among the properties below, which one is
considered as their conjugal property?

A. Properties inherited during marriage

B. Those acquired through occupation during marriage
C. Fruits of property acquired thru donation during the marriage
D. Income earned by each spouse during the marriage

28. One of the following is not a community property of the spouses

A. Properties inherited by the husband during marriage

B. Winnings in gambling
C. Fruits of property inherited during the marriage
D. Fruits of property inherited before the marriage

29. Fat Tai died. From among the properties enumerated below, which one is not considered
as part of his gross estate?

A. conjugal property
B. community property
C. exclusive property of the decedent
D. exclusive property of the surviving spouse

30. Three of the four items of deduction below are required to be included in the gross
estate. Which one is not?
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A. Standard deduction
B. Claims against insolvent person
C. Benefits received under RA 4917
D. The undiminished value of the property mortgage P50,000

Items 31 and 32 are based on the following information:

Mhar Dehrer, a German residing in Munich, Germany had the following data at the
time of his death:

Expenses:
Funeral expenses incurred in the Philippines P25,000
Funeral expenses incurred abroad 55,000
Accountant’s fee and audit fees 5,000
Medical expenses – 2 months before decedents death 50,000
Losses on the property located abroad 40,000
Claims against the estate 25,000

Properties:
Real property located in Osaka, Japan P2,400,000
Condo unit situated in Davao City 1,000,000
Shares of stock in Japanese Corporation 600,000
Other tangible personal properties – Phils. 1,000,000

31. The gross estate on the estate of Mhar Dehrer is -

A. P5,000,000 C. P2,000,000
B. 1,000,000 D. 2,600,000

32. How much is the taxable estate?

A. P1,935,000 C. P1,435,000
B. 1,774,000 D. 1,474,000

33. Pooh Ke, a nonresident alien, single died leaving the following assets -

Stocks in a domestic corp. P500,000

Stocks in a foreignc corp. 500,000
Tangible personal property, Philippines 1,500,000
Expenses (deductible) 500,000

Assuming there is no reciprocity, the estate tax due is -

A. P1,100,000 C. P96,000
B. 103,000 D. 66,000

34. Che Cua, a nonresident alien, died leaving the following assets -

Domestic shares P1,000,000

Foreign shares 3,000,000
Tangible personal property, Philippines 6,000,000
Expenses (deductible) 1,200,000

Note – The country where she is a citizen and resident does not impose transfer tax on
transmission of intangibles of Filipinos.

A. P5,280,000 C. P4,780,000
B. 3,800,000 D. 4,280,000

35. Papa died on August 15, 2019. His data are as follows:

Community properties P2,000,000

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Exclusive properties 3,000,000

Exclusive properties of Papa’s wife 1,000,000
Deductions (except std. deduction) 700,000

Included in the P3,000,000 is a parcel of land worth P200,000 and a car worth P400,000,
respectively.

The land was donated to him by his uncle on May 4, 2017 with a value of P150,000. At
the time of the donation, the land was mortgaged for P30,000 which was paid by his
uncle. The car had a value of P500,000 when it was inherited by Papa from his mother 2
½ years ago and mortgaged for P50,000 which was paid by Papa before he died.

The vanishing deduction on the estate of Papa is -

A. P258,000 C. P283,800
B. 262,520 D. None

Items 36 to 40 are based on the following information:

Decedent died leaving a family home composed of the following: House owned in
common by the spouses worth P1,500,000, and the land in which he exclusively owned
valued at P400,000. At the time the house was constructed, it had a cost of P300,000.
They also own a vacation house in Baguio worth P1,200,000.

36. If under conjugal partnership, after its liquidation the family home is classified as a -

A. Conjugal property
B. Exclusive property of the decedent
C. Exclusive property of the surviving spouse
D. Partly conjugal and partly exclusive of the decedent

37. Under conjugal partnership, the amount of conjugal portion of family home after
liquidation is -

A. P1,900,000 C. P3,100,000
B. 1,600,000 D. 2,800,000

38. Before liquidation, the deductible amount of family home is -

A. P1,000,000 C. P800,000
B. 950,000 D. 1,150,000

39. Under absolute community of property regime, the value of the family home is -

A. P1,900,000 C. P3,100,000
B. 1,600,000 D. 2,800,000

40. Under absolute community of property regime, the deductible amount of family home is
-

A. P1,000,000 C. P1,900,000
B. 1,500,000 D. 1,150,000

41. Bong single and a resident citizen, died with properties constituting his gross estate of
P6,000,000. Actual funeral expenses amounted to P150,000 and other charges against
the estate amounted to P210,000.The estate tax due is -

A. P940,000 C. P790,000
B. 56,400 D. 47,400
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42. Decedent, married in 1986 without an ante-nuptial agreement, died leaving the
following:

Real properties P3,000,000

Family house 1,000,000
Other real properties, exclusive 2,000,000
Family lot, exclusive 2,000,000
Funeral expense 275,000
Medical expense 650,000
Taxes and losses 300,000

The net taxable estate is -

A. P2,450,000 C. P2,250,000
B. 1,150,000 D. None

43. Bingo, single, died in the Philippines leaving a net estate in the Philippines of
P1,200,000 and P1,800,000 in the United States (US). His estate in US paid an estate tax
of P25,000 in that country. The Philippines estate tax payable is -

A. P155,000 C. P72,000
B. 147,000 D. 110,000

44. For 7 points, write the complete name of your professor in Business and Transfer Tax
Subject.

PROF. ROMMEL O. FABI, CPA, MMPA

“Consider it pure joy, my brothers and sisters, whenever you face trials
of many kinds, because you know that the testing of your faith produces
perseverance.” (James 1:2-3)
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