Transfer and Business Tax 2014 - Ballada

TRANSFER AND BUSINESS TAXATION BY WIN LU BALLADA 2014
Chapter 2
True or False
1. T
2. T
3. T
4. F
5. T
6.
7.
8.
9.
10.
F
F
T
F
T
Multiple Choice
1. D
2. A, B, D
3. C
4. C
5. B
6.
7.
8.
9.
10.
A
D
B
C
A
11.
12.
13.
14.
15.
F
F
F
T
T
Multiple Choice
1. C
2. A
3. D
4. C
5. B
True or False
1. F
2. T
3. T
4. T
5. T
6.
7.
8.
9.
10.
6.
7.
8.
9.
10.
Multiple Choice
1. B
2. B
3. D
4. C
5. B
A
B
D
B
B
T
F
T
F
T
6.
7.
8.
9.
10.
A
D
B
B
C
Chapter 3
True or False
1. T
2. T
3. T
4. T
5. F
6.
7.
8.
9.
10.
Identification
Classification
1. A
2. A
3. C
4. A
5. A
of Property
6. B
7. B
8. C
9. B
10. B
Identification
Kind of Transfer
1. A
2. B
3. B
4. D
5. C
True or False
1. F
2. T
3. T
4. T
5. T
F
T
T
T
T
6.
7.
8.
9.
10.
A
C
D
A
C
11.
12.
13.
14.
15.
C
C
C
C
C
6.
7.
8.
9.
10.
16.
17.
18.
19.
20.
21.
22.
23.
Problem
Adequacy of
A. 0
B. P750,000
C. P1.25M
T
T
T
T
F
B
C
A
C
C
C
B
A
Multiple Choice
1. A
2. C
3. D
4. B
5. D
6.
7.
8.
9.
10.
Identification
Classification
1. A
2. A
3. C
4. C
5. A
of Property
6. C
7. A
8. C
9. B
10. B
B
D
A
C
A
Multiple Choice
1. C
2. D
3. A
4. B
5. C
11.
12.
13.
14.
15.
C
C
C
C
C
6.
7.
8.
9.
10.
B
B
A
C
D
16.
17.
18.
19.
20.
21.
B
C
A
C
C
A
Consideration
A. P900,000
B. P400,000
C. 0
Essay
1.
Proceeds shall form part of the gross estate because the beneficiary is the estate. This is regardless of whether the designation is revocable o
r
irrevocable.
2.
Proceeds shall form part of the gross estate because the beneficiary is the administrator of the estate. This is regardless of whethe
r the
designation is revocable or irrevocable.
3.
Proceeds shall form part of the gross estate. Since the designation of the beneficiary is silent as to its revocability, it is presumed by law to b
e
revocable.
4.
Proceeds shall form part of the gross estate because the designation of the beneficiary is revocable.
5.
Proceeds shall not form part of the gross estate because the designation of the beneficiary is irrevocable.
Problem
Claims
1. A
2. B
3. D
4. A
5. B
6. D
*
Valuation
1. P3M
2. P1.4M
3. P272,000
4. P80,000
5. P550,000*
Situs of Property
1. within
2. within
3. within
4. within
5. without
Paid-in capital (P4 x 800,000 shs)

Retained earnings
Stockholders equity
Divide by outstanding shares
Book value per share
Multiply by shares held
Value to include in gross estate
6.
7.
8.
9.
10.
within
without
within
without
within
P3,200,000
1,200,000
P4,400,000
800,000
P
5.50
100,000
P 550,000
11.
12.
13.
14.
15.
without
within
within
without
without
16.
17.
18.
19.
20.
without
within
within
within
without
21.
22.
23.
24.
25.
within
within
within
without
without
26.
27.
28.
29.
within
within
without
within
Problem
a, b, and c. Gross estate = P31.2M (All items are added.)
d.
Gross estate = P10.025M (Consider items 4, 5, 7, 8, 9, 18, 19, 20 and 23.)
e.
Gross estate = P16.7M (Consider items 2, 4, 5, 7, 8, 9, 11, 14, 16, 17, 18, 19, 20, 21, 22 and 23.)
Problem
a, b, and c. Gross estate = P31.025M (All items are added.)
d.
Gross estate = P8.525M (Consider items 2, 3, 6, 7, 9, 10, 11, 19 and 21.)
e.
Gross estate = P18.725M (Consider items 2, 3, 6, 7, 8, 9, 10, 11, 13, 16, 18, 19, 20 and 21.)
Problem
a, b, and c. Gross estate = P26,987,500 (All items are added.)
d.
Gross estate = P7.65M
(Consider items 3, 4, 5, 6, 8, 11 and 15.)
e.
Gross estate = P13.975M (Consider items 1, 3, 4, 5, 6, 8, 11, 13, 15, 16, 20, 21, 22, 23, 26, 28 and 29.)
Chapter 4
True or False
1. T
2. F
3. T
4. T
5. F
6.
7.
8.
9.
10.
T
T
F
T
T
Multiple Choice
1.
2.
3.
4.
5.
B
B
B
D
A
11.
12.
13.
14.
15.
True or False
1. T
2. T
3. F
4. F
5. T
F
F
T
F
F
Multiple Choice
6. D
1. A
6.
7. C
2. D
7.
8. A
3. A
8.
9. D
4. D
9.
10. D
5. D
10.
* Embalming charges
Burial apparel of the decedent
Cost of coffin
Mourning apparel during burial of the surviving
spouse
Mourning apparel one unmarried minor child
Snacks and drinks during the wake
Honoraria of priest for daily mass for three days;
P500 a day
Telecommunication charges to inform relatives in
the provinces
Charges for death notice published in a newspaper
Cost of video footage of the burial and interment
Funeral car service during interment
Honorarium of priest who celebrated the mass
during interment
Cost of tombstone
Total
Actual funeral expenses (as computed)
5% x P1,800,000
Maximum limit
Deduction allowed
A
D
B
A
C
T
F
T
T
F
Problem 2
Answer: P78,800*
1,500
1,000
1,500
1,500
200
700
2,100
400
700
50,000
P78,800
P 78,800
90,000
200,000
P78,800
Multiple Choice
1. A
2. B
3. C
4. C
5. B
6.
7.
8.
9.
10.
C
C
A
B
C
11.
12.
13.
14.
15.
D
C
D
C
D
16.
17.
18.
19.
20.
B
A
B
B
D
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
B
C
C
C
B
41.
42.
43.
44.
45.
B
C
B
D
C
46.
47.
48.
49.
50.
C
C
C
A
A
B
A
C
A
C
Funeral Expenses
Problem 1
1. P50,000
2. P100,000
3. P175,000
4. P175,000
5. P200,000
P 2,000
2,200
15,000
6.
7.
8.
9.
10.
21.
22.
23.
24.
25.
A
D
C
B
B
26.
27.
28.
29.
30.
C
D
A
D
C
Problem 1
Problem 2
Real and personal properties
P3,500,000
P4,250,000
Family Home
Gross Estate
Less: Deductions
Ordinary Deductions
Funeral Expenses
Other Deductions
Special Deductions
Family Home
Standard Deduction
Medical Expenses
1,750,000
P5,250,000
Family Home
Gross Estate
Less: Deductions
Ordinary Deductions
Funeral Expenses
Other Deductions
Special Deductions
Family Home
Standard Deduction
Medical Expenses
1,500,000
P5,750,000
P 200,000
1,250,000
P1,000,000
1,000,000
350,000
Total Deductions
Net Taxable Estate
P1,450,000
2,350,000
P3,800,000
P1,450,000
200,000
950,000
P1,000,000
1,000,000
500,000
Total Deductions
Net Taxable Estate
Problem 3
P1,150,000
2,500,000
P3,650,000
P2,100,000
Problem 4
P3,750,000
P2,800,000
Family Home
Gross Estate
Less: Deductions
Ordinary Deductions
Funeral Expenses
Other Deductions
Special Deductions
Family Home
Standard Deduction
Medical Expenses
Total Deductions
Net Taxable Estate
900,000
P4,650,000
Family Home
Gross Estate
Less: Deductions
Ordinary Deductions
Funeral Expenses
Other Deductions
Special Deductions
Family Home
Standard Deduction
Medical Expenses
Total Deductions
Net Taxable Estate
750,000
P3,550,000
P 200,000
1,200,000
P 900,000
1,000,000
200,000
P1,400,000
2,100,000
P3,500,000
P1,150,000
Chapter 5
Problem
1. exempt
2. P2,500
3. P7,500
4. P12,500
5. P19,000
6.
7.
8.
9.
10.
P59,000
P99,000
P190,000
P410,000
P690,000
11.
12.
13.
14.
15.
P990,000
P1,315,000
P1,915,000
P4,215,000
P5,215,000
Chapter 6
Problem 1
Gross estate
Parcel of land in California, U.S.A.
House and lot in Quezon City (family
home)
Shares of stock in a foreign corporation
with office in California, U.S.A.
Car in California, U.S.A.
Bank deposit
Claim against an insolvent person
Less: Deductions
Funeral expenses
Actual
P312,500
5% x P6,375,000
318,750
Maximum limit
200,000
Allowed
P2,500,000
2,250,000
1,125,000
312,500
125,000
62,500
P6,375,000
P 200,000
P 177,500
1,050,000
P 750,000
1,000,000
400,000
P1,227,500
2,150,000
P3,377,500
P 172,500
Medical expenses (maximum limit)

Judicial expenses
Claims against the estate
Claims against an insolvent person
Family home
Standard deduction
Net taxable estate
500,000
43,750
90,625
62,500
1,000,000
1,000,000
2,896,875
P3,478,125
Estate tax
On
P2,000,000
1,478,125 x 11%
P3,478,125
P135,000.00
162,593.75
P297,594.00
Problem 2
Gross estate
Fishpond in General Santos City
Lot in Las Pinas City
House and lot in San Juan, Metro Manila
(family home)
Honda car
Farm in Nueva Ecija donated mortis
causa to sister
Time deposit
Less: Deductions
Mortgage on fishpond
Medical expenses incurred in 2012
th
Unpaid real estate tax for the 4 quarter
of 2012
Family home
Standard deduction
Net taxable estate
P2,500,000
625,000
593,750
375,000
262,500
150,000
P
P4,506,250
25,000
287,500
20,000
593,750
1,000,000
1,926,250
P2,580,000
Estate tax
On
P2,000,000
580,000 x 11%
P2,580,000
P135,000
63,800
P198,800
Problem 3
Gross estate
Farm, Camarines Sur
Bank deposit
House and lot in Guadalupe, Makati City
(family home)
Investment in a domestic partnership
Less: Deductions
Funeral expenses
Actual
P293,750
5% x P9,875,000
493,750
Maximum limit
200,000
Allowed
Medical expenses
Standard deduction
Family home
Net taxable estate
P4,375,000
2,125,000
1,875,000
1,500,000
200,000
237,500
1,000,000
1,000,000
Estate tax
On
P5,000,000
2,437,500 x 15%
P7,437,500
P9,875,000
P465,000
365,625
P830,625
2,437,500
P7,437,500
Problem 4
1. Gross estate
Cash in bank, Makati City
Car
Foreign shares
Domestic shares
Accounts receivable
Less: Deductions
Funeral expenses
Actual
P150,000
5% x P4,200,000
210,000
Maximum limit
200,000
Allowed
Judicial expenses
Claim against an insolvent person
Loss by robbery 3 months after death
Unpaid income tax for 2011
Legacy in favor of Philippine National
Red Cross
Legacy to City of Makati
Standard deduction
Net taxable estate
P1,200,000
1,000,000
700,000
700,000
500,000
100,000
P4,200,000
P150,000
100,000
100,000
200,000
160,000
50,000
100,000
1,000,000
1,860,000
P2,340,000
Estate tax
On
P2,000,000
340,000 x 11%
P2,340,000
P135,000
37,400
P172,400
2. Gross estate
Cash in bank, Makati City
Car
Domestic shares
Less: Deductions
Funeral expenses
Actual
P150,000
5% x P3,400,000
170,000
Maximum limit
200,000
Allowed
Judicial expenses
P3,400,000
P4,200,000
P1,200,000
1,000,000
700,000
500,000
P150,000
100,000
200,000
160,000
P610,000
x P610,000
P493,809.52

Red Cross
Net taxable estate
50,000.00
100,000.00
Estate tax
On
P2,000,000.00
756,190.48 x 11%
P2,756,190.48
P3,400,000.00
P135,000.00
83,180.95
P218,181.00
643,809.52
P2,756,190.48
3. Gross estate-Car
Less: Deductions
Funeral expenses
Actual
P150,000
5% x P700,000
35,000
Maximum limit
200,000
Allowed
Judicial expenses
P 700,000
P4,200,000
P700,000
P 35,000
100,000
200,000
160,000
P495,000
x P495,000
P 82,500

Red Cross
Net taxable estate
50,000
100,000
232,500
P467,500
Estate tax
On
P200,000
267,500 x 5%
P467,500
Exempt
P13,375
Chapter 7
True or False
1. T
6.
2. F
7.
3. T
8.
4. T
9.
5. F
10.
Multiple Choice
1. B
2. A
3. A
4. D
5. C
T
T
F
F
F
6.
7.
8.
9.
10.
D
B
D
C
C
Problem 1
Exclusive
Conjugal Properties:
Apartment, 3 units
Bank deposit
Domestic shares
Car
Exclusive Properties:
Family home
Vacant lot
Gross Estate
(Less): Conjugal Deductions
Funeral expenses
Unpaid mortgage on apartment
Note payable
Exclusive Deductions
Legacy to Hospicio de San Jose
Net Estate After Deductions
(Less):
Share of surviving spouse
Family home
Standard deduction
Net Taxable Estate
1,250,000
300,000
1,550,000
(20,000)
1,530,000
Conjugal
Total
1,000,000
700,000
500,000
400,000
2,600,000
2,600,000
1,550,000
4,150,000
(90,000)
(300,000)
(60,000)
(90,000)
(300,000)
(60,000)
2,150,000
(20,000)
3,680,000
(1,075,000)
(1,000,000)
(1,000,000)
75,000
530,000
(1,075,000)
(1,000,000)
(1,000,000)
605,000
Estate Tax Due

On
500,000
105,000
605,000
6
at
8%
15,000
8,400
23,400
Problem 2
Exclusive
Family home
Tobacco plantation
Bank deposit, PDCP
Personal property
Notes receivable
Family vacation house, Tagaytay
Family lot
Gross Estate
Funeral expenses
Unpaid mortgage on plantation
(Less):
Family home
Standard deduction
Net Taxable Estate
Conjugal
Total
1,350,000
2,000,000
650,000
300,000
200,000
4,500,000
800,000
500,000
1,300,000
4,500,000
1,300,000
5,800,000
1,300,000
(80,000)
(200,000)
4,220,000
(80,000)
(200,000)
5,520,000
(2,110,000)
(675,000)
(1,000,000)
435,000
(2,110,000)
(1,000,000)
(1,000,000)
1,410,000
(325,000)
975,000
Estate Tax Due

On
500,000
910,000
1,410,000
at
15,000
72,800
87,800
8%
Problem 3-1
Exclusive
Personal property
Apartment and lot
Land
Jeep
San Miguel shares
Gross Estate
Funeral expenses
Unpaid mortgage on apartment & lot
Vanishing deduction (Sch.)
(Less):
Standard deduction
Net Taxable Estate
Conjugal
Total
1,300,000
1,000,000
2,300,000
2,300,000
420,000
2,720,000
(50,000)
(70,000)
(50,000)
(70,000)
(30,588)
389,412
2,180,000
(30,588)
2,569,412
389,412
(1,090,000)
(1,000,000)
90,000
(1,090,000)
(1,000,000)
479,412
100,000
20,000
300,000
420,000
Schedule of Vanishing Deduction

Value taken
Land
Jeep
Less: Mortgage paid
Initial basis
50,000
20,000
Less:
40,000
2,720,000
x
*
120,000
70,000
30,000
40,000
**
1,765
Final Basis
38,235
Multiply by rate
Vanishing deduction
80%
30,588
* Gross estate
** Funeral expenses, Unpaid mortgage, apartment & lot
Problem 3-2
Exclusive
420,000
Gross Estate
Funeral expenses
Unpaid mortgage on land
(Less):
Standard deduction
Net Taxable Estate
Conjugal
2,300,000
Total
2,720,000
(50,000)
(70,000)
(50,000)
(70,000)
(10,000)
(38,088)
371,912
2,180,000
(10,000)
(38,088)
2,551,912
371,912
(1,090,000)
(1,000,000)
90,000
(1,090,000)
(1,000,000)
461,912
Schedule of Vanishing Deduction

Value taken
Land
Jeep
Less: Mortgage paid
Initial basis
Less:
50,000
20,000
50,000
2,720,000
x
*
130,000
Final Basis
Multiply by rate
Vanishing deduction
**
70,000
20,000
50,000
2,390
47,610
80%
38,088
* Gross estate
** Funeral expenses; Unpaid mortgage, apartment & lot, land
Problem 4
Exclusive
House and lot (Family Home)
Apartment
Personal property
Fishpond
Gross Estate
Funeral expenses
Claims against the estate
Unpaid mortgage on land
(Less):
Family home
Standard deduction
Net Taxable Estate
Total
1,500,000
3,000,000
400,000
4,900,000
4,900,000
500,000
5,400,000
(120,000)
(500,000)
(80,000)
(120,000)
(500,000)
(80,000)
(20,000)
(52,000)
428,000
4,200,000
(20,000)
(52,000)
4,628,000
428,000
(2,100,000)
(750,000)
(1,000,000)
350,000
(2,100,000)
(750,000)
(1,000,000)
778,000
500,000
500,000
Estate Tax Due
Conjugal
On
500,000
278,000
778,000
at
15,000
22,240
37,240
8%
Schedule of Vanishing Deduction:

Value taken, Fishpond
Less: Mortgage paid
Initial basis
140,000
40,000
100,000
Less:
100,000
5,400,000
x
*
720,000
Final Basis
Multiply by rate
Vanishing deduction
**
13,333
86,667
60%
52,000
* Gross estate
** Funeral expenses; Unpaid mortgage-apartment, fishpond; Claims against the estate
Problem 5
Conjugal Gross Estate
Fishpond, Dagupan
Domestic shares of stock
Investment in a business partnership
Time deposit
Funeral expenses
Unpaid mortgage on fishpond
Medical expenses
(Less):
Family home
Standard deduction
Net Taxable Estate
1,500,000
1,200,000
300,000
250,000
1,600,000
(192,500)
(350,000)
(500,000)
(1,903,750)
(750,000)
(1,000,000)
4,850,000
(1,042,500)
3,807,500
(3,653,750)
153,750
Estate Tax Due

On
153,750
Exempt
Problem 6
Exclusive
Azucarera, Tarlac
Personal property
Cash in bank
Apartment, QC
Gross Estate
Funeral expenses
Unpaid mortgage, azucarera
Income tax for 2011
Medical expenses for 2012
Mortgage on apartment
700,000
700,000
Conjugal
Total
1,350,000
1,800,000
400,000
160,000
200,000
3,910,000
3,910,000
700,000
4,610,000
(130,000)
(140,000)
(24,000)
(75,000)
(130,000)
(140,000)
(24,000)
(75,000)
(100,000)
(100,000)

(Less):
600,000
3,541,000
4,141,000
(1,770,500)
(1,770,500)
Family home
Standard deduction
Net Taxable Estate
(675,000)
(1,000,000)
95,500
600,000
(675,000)
(1,000,000)
695,500
Estate Tax Due

On
500,000
195,500
695,500
at
15,000
15,640
30,640
8%
Problem 7
Exclusive
Real Properties
Family Home
Other Exclusive Properties
Gross Estate
Less:
Ordinary Deductions
Conjugal Deductions
Funeral expenses
Other Deductions
Total Conjugal Deductions
Net Conjugal Estate
Special Deductions
Family Home
Standard Deduction
Medical Expenses
Total Deductions
Net Estate
Less: 1/2 Share of Surviving Spouse
Conjugal Property
Conjugal Deduction
Net Conjugal Estate
(P2,700,000/2)
Net Taxable Estate
1,750,000
2,800,000
4,550,000
Conjugal
Total
4,500,000
4,500,000
4,500,000
4,550,000
9,050,000
(200,000)
(1,600,000)
(1,800,000)
2,700,000
(200,000)
(1,600,000)
(1,800,000)
(1,000,000)
(1,000,000)
(500,000)
(4,300,000)
4,750,000
4,500,000
(1,800,000)
2,700,000
(1,350,000)
3,400,000
Notes:
1. FH is the exclusive property of the decedent, hence, it does not form part of the conjugal gross estate.
2. The estate is allowed to claim the maximum P1 million FH deduction under 'special deductions.'
10
Problem 8
Exclusive
Family Home
Conjugal
2,500,000
Total
Other Real Properties

Gross Estate
Less:
Ordinary Deductions
Conjugal Deductions
Funeral expenses
Other Deductions
Net Conjugal Estate
Special Deductions
Family Home
Standard Deduction
Medical Expenses
Total Deductions
Net Estate
Conjugal Property
Conjugal Deduction
Net Conjugal Estate
(P4,400,000/2)
Net Taxable Estate
3,800,000
2,200,000
2,200,000
6,300,000
(200,000)
(1,700,000)
(1,900,000)
4,400,000
6,300,000
2,200,000
8,500,000
(200,000)
(1,700,000)
(1,900,000)
(1,000,000)
(1,000,000)
(480,000)
(4,380,000)
4,120,000
6,300,000
(1,900,000)
4,400,000
(2,200,000)
1,920,000
Problem 9
Exclusive
Family Home
Gross Estate
Less:
Ordinary Deductions
Conjugal Deductions
Funeral expenses
Other Deductions
Net Conjugal Estate
Special Deductions
Family Home
Standard Deduction
Medical Expenses
Total Deductions
Net Estate
Conjugal Property
Conjugal Deduction
Net Conjugal Estate
(P6,100,000/2)
Net Taxable Estate
Conjugal
1,700,000
7,000,000
2,500,000
2,500,000
8,700,000
(200,000)
(2,400,000)
(2,600,000)
6,100,000
Total
8,700,000
2,500,000
11,200,000
(200,000)
(2,400,000)
(2,600,000)
(850,000)
(1,000,000)
(500,000)
(4,950,000)
6,250,000
8,700,000
(2,600,000)
6,100,000
(3,050,000)
3,200,000
11
Problem 10
Exclusive
Family Home
Conjugal
Total
3,300,000
1,100,000
4,400,000
Family Lot
Gross Estate
Less:
Ordinary Deductions
Conjugal Deductions
Funeral expenses
Other Deductions
Net Conjugal Estate
Special Deductions
Family Home
Exclusive Lot
Conjugal Home
(P1,100,000/2)
Standard Deduction
Medical Expenses
Total Deductions
Net Estate
Conjugal Property
Conjugal Deduction
Net Conjugal Estate
(P2,750,000/2)
Net Taxable Estate
2,200,000
450,000
2,650,000
4,400,000
(150,000)
(1,500,000)
(1,650,000)
2,750,000
2,650,000
7,050,000
(150,000)
(1,500,000)
(1,650,000)
450,000
550,000
(1,000,000)
(1,000,000)
(450,000)
(4,100,000)
2,950,000
4,400,000
(1,650,000)
2,750,000
(1,375,000)
1,575,000
Chapter 8
True or False
1. T
6. T
2. T
7. T
3. T
8. T
4. T
9. T
5. T
10. F
Problem 1
Exclusive
Communal Properties:
Lot w/ apartment, QC
Lot w/ apartment, Makati
Farm, Nueva Ecija
Gross Estate
(Less): Communal Deductions
Funeral expenses
Judicial expenses
Accounst payable
Fire loss
Unpaid mortgage on farm
Legacy to Makati City
Communal
Total
1,800,000
1,200,000
3,000,000
3,000,000
600,000
3,600,000
(100,000)
(200,000)
(70,000)
(30,000)
(100,000)
(200,000)
(70,000)
(30,000)
(150,000)
(100,000)
350,000
2,600,000
(150,000)
(100,000)
2,950,000
350,000
(1,300,000)
(1,000,000)
300,000
(1,300,000)
(1,000,000)
650,000
600,000
600,000
12
(Less):
Standard deduction
Net Taxable Estate
Estate Tax Due
On
500,000
15,000
150,000
650,000
at
8%
12,000
27,000
Communal
Total
1,300,000
2,000,000
1,000,000
700,000
5,000,000
5,000,000
200,000
5,200,000
(80,000)
(300,000)
(20,000)
(80,000)
(300,000)
(20,000)
(50,000)
150,000
4,600,000
(50,000)
4,750,000
150,000
(2,300,000)
(650,000)
(1,000,000)
650,000
(2,300,000)
(650,000)
(1,000,000)
800,000
Problem 2
Exclusive
Family home
Investment in a business partnership
Fishpond
Personal property
Ranch
Gross Estate
Funeral expenses
Unpaid mortgage on fishpond
Unpaid real property taxes
Unpaid mortgage on ranch
(Less):
Family home
Standard deduction
Net Taxable Estate
200,000
200,000
Estate Tax Due

On
500,000
300,000
800,000
8%
15,000
24,000
39,000
Communal
Total
3,000,000
1,200,000
300,000
4,500,000
4,500,000
1,120,000
5,620,000
(50,000)
(100,000)
(70,000)
(150,000)
(50,000)
(100,000)
(70,000)
(150,000)
(20,000)
1,100,000
4,130,000
(20,000)
5,230,000
1,100,000
(2,065,000)
(1,000,000)
(1,000,000)
65,000
(2,065,000)
(1,000,000)
(1,000,000)
1,165,000
at
Problem 3
Exclusive
Family home
Inherited from father
Owned by Mrs. Llovido before marriage
Received as gift from mother
Income from gift from mother
Gross Estate
Funeral expenses
Judicial expenses
Medical expenses
Obligations during marriage
Indebtedness before marriage
(Less):
Family home
Standard deduction
Net Taxable Estate
1,115,000
5,000
1,120,000
13
Estate Tax Due

On
500,000
665,000
1,165,000
at
8%
15,000
53,200
68,200
Problem 4
Exclusive
Communal
Total
Family home acquired during marriage

Owned by Mr. Castaneda before marriage
Owned by Mrs. Castaneda before marriage
Inheritance
Gross Estate
Funeral expenses
Judicial expenses
Unpaid obligations
Unpaid mortgage on property inherited
(Less):
Family home
Standard deduction
Net Taxable Estate
4,000,000
300,000
200,000
4,500,000
4,500,000
2,000,000
6,500,000
(200,000)
(80,000)
(35,000)
(200,000)
(80,000)
(35,000)
(200,000)
(736,615)
1,063,385
4,185,000
(200,000)
(736,615)
5,248,385
1,063,385
(2,092,500)
(1,000,000)
(1,000,000)
92,500
(2,092,500)
(1,000,000)
(1,000,000)
1,155,885
2,000,000
2,000,000
Estate Tax Due

On
500,000
655,885
1,155,885
Schedule of Vanishing Deduction:

Value taken, Property inherited
Less: Mortgage paid
Initial basis
Less:
1,000,000
6,500,000
at
x
*
15,000
52,471
67,471
8%
515,000
**
Final Basis
Multiply by rate
Vanishing deduction
* Gross estate
** Funeral expenses, Judicial expenses, Unpaid obligations, Unpaid mortgage on property inherited
14
Chapter 9
Multiple Choice
1. C
2. C
3. B
4. D
5. A
6.
7.
8.
9.
10.
D
C
B
A
D
11.
12.
13.
14.
A
D
C
C
1,100,000
100,000
1,000,000
79,231
920,769
80%
736,615
Problem 1
a. Philippine estate tax:
On P2,000,000
P135,000
Allowable tax credit:

Limitation 1
USA
(P600,000/P2M x P135,000)
Actual
Allowed
P 40,500
250,000
P40,500
Singapore
(P400,000/P2M x P135,000)
Actual
Allowed
Total (Limitation 1)
P 27,000
120,000
Limitation 2
(P1M/P2M x P135,000)
Actual (P250,000 + P120,000)
Allowed
P 67,500
370,000
27,000
P67,500
P67,500
Tax credit to be deducted (either limitation)
P67,500
b. Philippine estate tax still due:

Philippine estate tax
Less: Tax credit
Estate tax still due
P135,000
67,500
P 67,500
Problem 2
1a. Philippine estate tax:
On P
500,000
700,000 x 8%
P1,200,000
P15,000
56,000
P71,000
b. Allowable tax credit:

Limitation 1
Indonesia
(P400,000M/1.2M x P71,000)
Actual
Allowed
P23,666.67
10,000.00
P10,000
Vietnam
(P200,000/P1.2M x P71,000)
Actual
Allowed
P11,833.33
2,000.00
Limitation 2
(P600,000/P1.2M x P71,000)
Actual (P10,000 + P2,000)
Allowed
P35,500.00
12,000.00
2,000
P12,000
P12,000
15
P12,000
c. Philippine estate tax still due:

Philippine estate tax ( computed in a)
Less: Tax credit (computed in b)
Estate tax still due
P71,000
12,000
P59,000
2a & c.
On P500,000
P15,000
100,000 x 8%
P600,000
8,000
P23,000
b. No allowable tax credit.
Chapter 10
True or False
1. F
2. T
3. T
4. T
5. F
6.
7.
8.
9.
10.
T
T
F
T
T
Multiple Choice
1. B
2. C
3. A
4. B
5. C
6.
7.
8.
9.
10.
T
T
T
T
T
Multiple Choice
1. C
2. A
3. B
4. D
5. B
6.
7.
8.
9.
10.
F
T
T
F
T
6.
7.
8.
9.
10.
A, B
D
B
B
D
Chapter 11
True or False
1. F
2. T
3. F
4. T
5. T
6. D
7. D
8. B
Chapter 12
True or False
1. F
2. T
3. T
4. T
5. T
Multiple Choice
1. C
2. B
3. C
4. D
5. A
6. B
Chapter 13
Multiple Choice:
1. C
2. C
3. B
4. B
5. D
Problems
6. D
7. A
8. A
9. D
10. A
11.
12.
13.
14.
15.
D
B
D
A
C
16.
17.
18.
19.
20.
21.
B
B
D
A
B
B
Problems
6. C
7. B
8. C
9. D
10. A
11.
12.
13.
14.
15.
C
A
D
B
A
16.
17.
18.
19.
20.
C
D
B
A
C
Chapter 14
Multiple Choice:
1. D
2. D
3. D
4. B
5. P90,000
21. D
16
For nos. 6-21, please see computation below.

Mrs. Herrera
1. Donors tax to be based on the table for donations to non-strangers.
Gross gift, June 13, To Lance
Less: Exemption
Net gift
Add: Prior net gift
Gross gift, Jan. 25, To Leonard
Less: Exemption
Aggregate net gift
P700,000
300,000
P400,000
P400,000
10,000
390,000
P790,000
Multiple Choice
1. C
2. A
3. C
4. A
5. A
6.
7.
8.
9.
10.
11.
C
A
C
B
C
D
Donors tax, total net gift

On P500,000
P14,000
290,000 x 6% 17,400
P790,000
Less: Tax on prior net gift
On P200,000
P2,000
190,000 x 4% 7,600
P390,000
Donors tax still due
2.
P31,400
9,600
P21,800
30% Donors tax for donations to strangers.

Gross gift, Dec. 25, To Patty
Less: Exemption
Net gift
Add: Prior net gift
Gross gift, Jan. 25, To Pam
Less: Exemption
Net gift
Gross gift, Apr. 8, To IBP
Less: Exemption
Net gift
Gross gift, May. 13, To Cavite Prov.
Less: Exemption
Net gift
P430,000
30,000
P400,000
P400,000
0
P400,000
P400,000
400,000
0
P2,000,000
2,000,000
0
Total net gift

Multiply by:
Donors tax on total net gift
Less: Donors tax on all prior net gift
(Jan. 25, P400,000 x 30%)
Donors tax due
400,000
P800,000
30%
P240,000
120,000
P 120,000
Mr. Herrera
1. Donors tax to be based on the table for donations to non-strangers.
Gross gift, Dec. 25, To Patty
Less: Exemption
Net gift
Add: Prior net gift
Gross gift, Jan. 25, To Leonard
Less: Exemption
Aggregate net gift
Donors tax, total net gift
On P500,000
P14,000
290,000 x 6% 17,400
P790,000
P430,000
30,000
P400,000
P400,000
10,000
390,000
P790,000
P31,400
Less: Tax on prior net gift

On P200,000
P2,000
190,000 x 4% 7,600
P390,000
9,600
P21,800
17
2.
30% Donors tax for donations to strangers.

Gross gift, June 13, To Lance
Less: Exemption
Net gift
Add: Prior net gift
P700,000
300,000
P400,000
Gross gift, Jan. 25, To Pam

Less: Exemption
Net gift
P400,000
0
Gross gift, Apr. 8, To IBP
P400,000
P400,000
Less: Exemption
Net gift
Gross gift, May. 13, To Cavite Prov.

Less: Exemption
Net gift
400,000
0
P2,000,000
2,000,000
0
Total net gift

Multiply by:
Donors tax on total net gift
Less: Donors tax on all prior net gift
(Dec. 25, P400,000 x 30%)
Donors tax due
400,000
P800,000
30%
P240,000
120,000
P120,000
Chapter 15
Problem 1
a. Philippine donors tax:
On P2,000,000
P135,000
Allowable tax credit:

Limitation 1
Netherlands
(P600,000/P2M x P135,000)
Actual
Allowed
P 40,500
250,000
P40,500
Venezuela
(P400,000/P2M x P135,000)
Actual
Allowed
P 27,000
120,000
27,000
P67,500
Limitation 2
(P1M/P2M x P135,000)
Actual (P250,000 + P120,000)
Allowed
P 67,500
370,000
P67,500
P67,500
b. Philippine donors tax still due:

Philippine donors tax
Less: Tax credit
P135,000
67,500
P 67,500
Problem 2
1a. Philippine donors tax:
On P
500,000
700,000 x 8%
P1,200,000
P15,000
56,000
P71,000
18
b. Allowable tax credit:

Limitation 1
Cambodia
(P400,000M/1.2M x P71,000)
Actual
Allowed
Aruba
(P200,000/P1.2M x P71,000)
Actual
Allowed
P23,666.67
10,000.00
P10,000
P11,833.33
2,000.00
2,000
P12,000
Limitation 2
(P600,000/P1.2M x P71,000)
Actual (P10,000 + P2,000)
Allowed
P35,500.00
12,000.00
P12,000
P12,000
c. Philippine donors tax still due:

Philippine donors tax ( computed in a)
Less: Tax credit (computed in b)
P71,000
12,000
P59,000
2a & c.
On P500,000
100,000 x 8%
P600,000
P15,000
8,000
P23,000
b. No allowable tax credit.
Chapter 17
True or False
1. T
2. T
3. F
4. T
5. T
6.
7.
8.
9.
10.
T
T
T
T
F
Multiple Choice
1. C
2. B
3. C
4. A
5. A
Problems
Suysan Realty next page please.
1.
2.
3.
P18,000
P250,000 x 12% = P30,000
P125,000 x 12% = P15,000
P100,000 x 12% = P12,000
P25,000 x 12% = P3,000
Not covered
P50,000 x 12% = P6,000
P50,000 x 12% = P6,000
Total Output Tax = P72,000
P2,525,000 x 12/112 = P270,535.71 (a)
P1,701,080 x 12% = P204,129.60 (b)
P270,000 x 12% = P32,400 (c)
VAT Due = ((a) + (c)) ((b) + P18,500) = P80,306.11
Problem 1:
Sales Scheme: no reservation, 10/40/50
Selling Price per Contract (excluding VAT), Jan. 5, 2012
Downpayment, Jan. 15, 2012
Balance
Balance to be paid as follows:
40% in equal monthly amortizations
50% upon turnover
3,199,200
319,920
2,879,280
Given
Given
10%
90%
1,279,680
1,599,600
2,879,280
40%
50%
90%
2,800,000
Given
36
35,546.67
426,560.00
Given
19
Zonal Value
Term (in months)
Monthly Amortization
Total Monthly Amortizations (Jan. 31 to Dec. 31, 2012)
Initial Payments (DP and MA during the year)
Divided by: GSP (see if fair value is lower)
Test (whether sale is on installment or on deferred-payment)
What will be the basis of VAT?
How much is the downpayment before VAT?
What is the amount to be paid (ex-VAT) before turnover?
How much will the monthly amortization (ex-VAT) be?
746,480.00
3,199,200.00
23.33%
12
did not exceed 25%
selling price per contract

319,920.00
1,599,600.00
35,546.67
What is the total amortizations (VAT inclusive) during the year of sale?
What is the initial payments?
Is this sale on installment or on deferred-payment basis?
How much is the output tax related to the event on Jan. 15, 2012?
How much is the output tax related to the event on Jan. 31, 2012?
How much is the total output tax related to this sale for 2012?
477,747.20
746,480.00
on installment
38,390.40
4,265.60
89,577.60
Problem 2:
Sales Scheme: no reservation, 10/50/40
Selling Price per Contract (excluding VAT), Jan. 5, 2012
Downpayment, Jan. 15, 2012
Balance
Balance to be paid as follows:
50% in equal monthly amortizations
40% upon turnover
Zonal Value
Term (in months)
Monthly Amortization
Total Monthly Amortizations (Jan. 31 to Dec. 31, 2012)
Initial Payments (DP and MA during the year)
Divided by: GSP (see if fair value is lower)
Test (whether sale is on installment or on deferred-payment)
2,700,000
270,000
2,430,000
Given
Given
10%
90%
1,350,000
1,080,000
2,430,000
50%
40%
90%
2,525,000
Given
36
37,500.00
450,000.00
Given
720,000.00
2,700,000.00
26.67%
What will be the basis of VAT?

How much is the downpayment before VAT?
What is the amount to be paid (ex-VAT) before turnover?
How much will the monthly amortization (ex-VAT) be?
What is the total amortizations (VAT inclusive) during the year of sale?
What is the initial payments?
Is this sale on installment or on deferred-payment basis?
How much is the output tax related to the event on Jan. 2012?
How much is the output tax related to the event on Feb. 28, 2012?
12
exceeded 25%
selling price per contract

270,000.00
1,080,000.00
37,500.00
504,000.00
720,000.00
on deferred-payment
324,000.00
zero
Chapter 18
Multiple Choice
1. B
2. A
3. D
4. D
5. C
20
Chapter 20
Multiple Choice
1. B
2. B
3. D
4. C
5. A
6. D
7. C
Chapter 23
Multiple Choice
Theory
1. B
1. A
6. B
11. D
Multiple Choice
1. B
6. D
11. B
2.
3.
4.
5.
B
B
B
C
2.
3.
4.
5.
D
C
A
B
Sales
Taxpayer
Price
Concessionaire
100
Manufacturer
250
Wholesaler
450
Retailer
700
Household (Purchase Price)
7.
8.
9.
10.
D
D
D
D
12.
13.
14.
15.
C
B
B
C
2.
3.
4.
5.
Value
Added
100
Output
Tax
10
Input
Tax
0
150
200
250
700
25
45
10
25
70
45
goods
P270,000
12,000*
P542,000
17,000
P525,000
12%
P 63,000
Add: Deemed sales-goods taken for personal use

Gross taxable sales/receipts
Deduct: Allowable sales returns & allow.
Net taxable sales/receipts
Multiply by
Output tax
D
B
C
B
VAT
Payable
10
15
20
25
70
7.
8.
9.
10.
C
C
D
D
12. D
13. A
Multiple Choice Multiple Choice

Problem
Problem
1. B 6. B 11. C
16. D
1. A 6. C
2. A 7. A 12. D
17. B
2. B
3. D 8. B 13. A
3. B
4. B 9. B 14. B
4. D
5. C 10. C
15. A
5. C
SGB Corporation
Total amount per invoice
Local purchases-services
Total amount per invoice/receipt
Less: Allowable purchase ret. & allow.
Net purchases
Multiply by
Input Tax
P530,000
50,000
P320,000
7,500
P312,500
12%
P 37,500
Advance VAT
a) Invoice value (peso)*
b) Customs duties & other
charges except VAT
c) 5% Mark-up (a + b)
5% (905,000 + 200,000)
Total (a + b + c)
Multiply by
Tax base
Multiply by VAT rate
Advance VAT
905,000 (1)
a) Invoice value
200,000
55,250
P 1,160, 250
75%
P870,187.50
12%
P104,422.50
P800,000
b) Estimated freight expenses

c) 5% Mark-up (a + b)
5% (800,000 + 18,000)
Total (a + b + c)
Multiply by
Tax base
Advance VAT
(2)
(3)
(4)
18,000
40,900
P858,900
75%
P644,175
12%
P 77,301
*US$20,000 x P45.25 = 905,000
21
Multiple Choice
Problem
1. B
2. C
3. D
4. D
5. D
6.
7.
8.
9.
10.
B
B
C
B
D
11.
12.
13.
14.
15.
C
C
D
C
B
16.
17.
18.
19.
20.
D
A
A
D
B
21.
22.
23.
24.
25.
B
C
C
D
D
26.
27.
28.
29.
30.
(1)
A
A
D
D
A
(2)
(3)
(4)
Local purchases-
Multiple Choice
Problem
1. A
6. D
2. D
7. B
3. D
8. B
4. B
9. A
5. D
10. A
11. Any answer is acceptable.
Multiple Choice
Problem
1. A
2. A
3. B
4. A
5. C
Amount of input tax
6.
7.
Multiple Choice
Problem
1. B
2. B
3. A
4. B *
5. A
A
D
Problem
1. B
2. A
3. C
4. C
5. A
6. D
*2012 = P11,832 (394,400 x 3%). Note that the receipts of P350,000 is below the new
threshold of P394,400 (which is P98,600 per cab per quarter).
Mr. A Customs Broker
(1)
P120,000.00
= P770
Output Tax Due (P1,000,000 x 12%)

Less: Input Taxes
(a) Directly Attributable
(1) Purchase of supplies
(2) Freight services
Total Purchases
(b) Purchase of service common to both the
activity subject to VAT and the
activity not subject to VAT P300,000
(Rental of office space)
Rule on Apportionment:
P1,000,000/P1,600,000* x P300,000
P1,000,000 VAT sale
600,000 Non-VAT sale
P1,600,000 *Total Sales
Net VAT Payable
Problem
1. 20,000
2. 10,000
3. 8,000
4. 7,000
5. 9,000
6. 0
P200,000
80,000
P280,000
12%
P187,500
x 12%
(33,600.00)
(22,500.00)
(2)
P 63,900.00
(3)
7. 18,000
8. 5,000
9. 8,000
Q4: Input tax attributable to VAT-exempt sales for the monthInput tax on VAT-exempt sales
Ratable portion of the input tax not
directly attributable to any activity:
VAT-exempt sales
Total Sales
P100,000
400,000
P2,000
not directly attributable

x
P20,000
P5,000
22
Total input tax attributable to

VAT-exempt sales
P7,000
Q5: Input tax attributable to sales to government for the monthInput tax on sale to government
Ratable portion of the input tax not Amount of input tax
x
Taxable sales to government
Total Sales
P100,000
400,000
(2)
P4,000
Total input tax attributable to sales
x
P20,000
000
P5,
P9,000
to government
Q7: Creditable input tax for the monthInput tax on sale subject to 12%
Input tax on zero-rated sales
Ratable portion of the input tax not
Taxable sales (0% and 12%)
Total Sales
P200,000
400,000
P 5,000
3,000

x
P20,000
P10,000
Total creditable input tax for the month
P18,000
The table below shows a summary of the foregoing transactions of DBA Corporation:
Input VAT
directly
attributable
Output
VAT
Sale subject to 12%
VAT
Sale subject to 0% VAT
12,000
5,000
3,000
Sale of Exempt Goods
Input VAT not

directly
attributable to
any activity
Total
Input
VAT
5,000
Creditable
Input
VAT
10,000 (Q2)
10,000 (Q7)
Amount of5,000
input tax 8,000 (Q3)
Excess
Input
VAT for
carry-over
Net VAT
Payable
Input
VAT for
refund
2,000
8,000 (Q7)
0
0
Unrecoverable Input
VAT
0
8,000 (Q9)
Sale to Govt. subject to

5% Final
Withholding VAT
2,000
5,000
7,000 (Q4)
0 (Q6)
4,000
5,000
9,000 (Q5)
7,000**
7,000*
12,000
5,000 (Q8)
2,000*
20,000 (Q1)
* These amounts are not available for input tax credit but may be recognized as cost or expense.
**Standard input VAT of 7% on sales to Government as provided in Sec. 4.114-2(a).
Withheld by Government entity as Final Withholding VAT.
23
Chapter 24
Problem
1. A (50,000 x 5%)
2. D (50,000 x 7%)
3. C (2,500 + 3,500)
4. A
5. D
Chapter 25
6.
7.
8.
9.
10.
D
C
A
C
B
Multiple Choice: Problem

1. C
1. A
2. A
2. D
3. D*
3. C
4. A
4. B
5. A
5. C
6. C
7. B
*15 x 21,900 x 3%

Note: In 2010, upon pretermination, the loan agreement shall be

Interest Income with Maturity of Less
than Five Years
P100,000
Multiply by GRT Rate

Rentals
Net Trading Gain for April 2012
5%
P50,000
7%
P20,000
Less: Net Trading Loss for March 2012
(10,000)
Adjusted Net Trading Gain

Total
P10,000
7%
P5,000
(4)
3,500
(5)
700
P9,200
(6)
P1,500,000 x 3% = P45,000
P750,000 x 12% = P90,000
P250,000 x 12% = P30,000
Total VAT = P120,000
VAT = 9M x 12% = P1,080,000

VAT = 9M x 12% = P1,080,000
% Tax = 9M x 3% = P270,000
VAT = 9M x 12% = P1,080,000
% Tax = 9M x 2% = P180,000
VAT = 8.65M x 12% = P1,038,000
% Tax = .35M x 10% = P35,000
UIOGD-AMDG
24
Professors Notes:
4
3
2
1
Less than 1
year
0
P100,000
100,000
100,000
100,000
100,000
5%
5%
5%
5%
P5,000
5,000
5,000
5,000
5%
5,00
P25,000
MVP Company
3.
4.
5.
6.
7.
8.
2008
2009
2010
2011
2012
Biyahe Pilipinas Bus

1.
2.
reclassified and the correct gross receipt tax, including prior years,
shall be recomputed on the basis of the new category as shown
hereunder:
Gross
Remaining
Amount of Applicable
Receipts
Year
Maturity
Interest, etc. Tax Rate
Tax
Total Gross Receipts Tax

Less: GRT Previously Paid
GRT Due as Recomputed
P25,000
9,000
P16,000
(8)
(9)
(10)
25

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TRANSFER AND BUSINESS TAXATION BY WIN LU BALLADA 2014

Paid-in capital (P4 x 800,000 shs)

Real and personal properties

Real and personal properties

Real and personal properties

Real and personal properties

Medical expenses (maximum limit)

Legacy in favor of Philippine National

Legacy in favor of Philippine National

Estate Tax Due

Estate Tax Due

Schedule of Vanishing Deduction

Schedule of Vanishing Deduction

Estate Tax Due

Schedule of Vanishing Deduction:

Estate Tax Due

Net Estate After Deductions

Estate Tax Due

Other Real Properties

Estate Tax Due

Estate Tax Due

Family home acquired during marriage

Estate Tax Due

Schedule of Vanishing Deduction:

Allowable tax credit:

Tax credit to be deducted (either limitation)

b. Philippine estate tax still due:

b. Allowable tax credit:

Tax credit to be deducted (either limitation)

c. Philippine estate tax still due:

b. No allowable tax credit.

For nos. 6-21, please see computation below.

Donors tax, total net gift

30% Donors tax for donations to strangers.

Total net gift

Less: Tax on prior net gift

30% Donors tax for donations to strangers.

Gross gift, Jan. 25, To Pam

Gross gift, Apr. 8, To IBP

Gross gift, May. 13, To Cavite Prov.

Total net gift

Allowable tax credit:

Tax credit to be deducted (either limitation)

b. Philippine donors tax still due:

b. Allowable tax credit:

Tax credit to be deducted (either limitation)

c. Philippine donors tax still due:

b. No allowable tax credit.

did not exceed 25%

selling price per contract

What will be the basis of VAT?

selling price per contract

Add: Deemed sales-goods taken for personal use

Multiple Choice Multiple Choice

b) Estimated freight expenses

*US$20,000 x P45.25 = 905,000

Output Tax Due (P1,000,000 x 12%)

not directly attributable

Total input tax attributable to

not directly attributable

Total input tax attributable to sales

not directly attributable

Total creditable input tax for the month