QUIZ 2
TAXATION 2
SY. 2022-2023
NOTE: Assume date of death happened after the TRAIN LAW took effect.
1. Juan (J) and Maria (M), both single, cohabited. The following properties were
valued at the time of J’s death: (a) common properties of J and M– Php 7,000,000;
(b) Exclusive properties of J – Php 3,000,000; and (c) Exclusive properties of M –
Php 2,000,000.
How much is the estate of J? Explain briefly.
ANSWER:
The total estate of Juan (J) is PhP6,500,000. In the absence of proof to the
contrary, properties acquired while they lived together shall be presumed to have
been obtained by their joint efforts, work or industry, and shall be owned by them
in equal shares. Since J and M commonly own a property worth PhP7,000,000, it
will be presumed that they will divide it equally unless there is proof to the
contrary otherwise. Additionally, J has exclusive property of PhP3,000,000 making
a total of PhP6,500,000 as the total estate of J.
2. X is an American citizen residing in Canada. Upon his demise, he left behind,
among others an automobile registered in his name in the Philippines. Assume
Canadian law grants an exemption from estate tax to non-resident Filipino
decedents owning vehicles in Canada.
What is the treatment of the automobile for purposes of estate taxation? Explain
briefly.
ANSWER:
The personal properties of a non-resident, not citizen of the Philippines, would not
be included in the gross estate if the intangible personal property is in the
Philippines and the reciprocity clause of the estate tax law applies.
3. X, unmarried, Filipino, left behind the following properties upon his demise:
House and lot (purchased from lump-sum pension)
Used van (bequeathed to Parish Church per last
will & testament)
Cash (bequeathed to Cagayan de Oro City per
last will & testament)
Php 7,000,000
Php 2,000,000
Php 1,000,000
What is the treatment of the foregoing properties for estate tax purposes? Explain
briefly.
ANSWER:
The gross estate of X amounts to Php3,000,000. The computation of the gross estate
here will not include the house and lot (purchased from lump-sum pension).
4. X sold his condominium unit to Y for Php 8,000,000. X died a year later. The fair
market value of the unit at the time of the sale was Php 4,000,000 but rose to Php
5,000,000 at the time of X’s death.
Shall the condominium unit form part of X’s gross estate for estate tax purposes?
Explain briefly.
ANSWER:
No. The condominium unit shall not be part of X’s gross estate for estate tax
purposes and X will pay Php O. Since it was sold to Y before X’s death and it was
sold it an amount with sufficient consideration.
5. X executed a last will and testament leaving behind the naked title of a coconut
plantation to his younger son Z, and its usufruct to his elder son Y for the duration
of ten (10) years. Y died five (5) years after X’s death.
How shall the property be treated for estate tax purposes upon the death of Y?
ANSWER:
The property shall form part of X’s gross estate upon his death, but it shall be
exempt from estate tax upon Y’s death.
6. X executed a power of appointment whereby he transferred his beach resort in
trust for Y for the entire lifetime of the latter. The power of appointment obliges Y
to designate by virtue of a last will and testament any person of his choice to inherit
the property. Before his demise, Y executed a last will and testament naming Z as
the devisee of the property.
a. Shall the beach resort form part of the gross estate of Y upon his death?
Explain briefly.
b. Assuming that the power of appointment executed by X empowered Y to
choose from any one of his children to inherit the beach resort, will your
answer be the same? Explain briefly.
ANSWER:
a. Yes. It will form part of the Gross Estate of Y. The power of appointment given
by X to Y is a General Power. The donee of a general power of appointment
holds the appointed property with all the attributes of ownership thus, the
appointed property shall form part of the gross estate of the donee of the power
upon his death.