Name Date

Business and Transfer Taxes P1 Exam

Answer the exam for 2 hours.

1. A died leaving a house and lot to B on March 31, 2012 which was questioned by C and it is under
litigation but, subsequently, the parties executed an extra-judicial settlement. The last day for filing
the estate tax return is: points: 1
April 30,
2013
April 30,
2016
September 30,
2012
October 30,
2012

2. Which of the following is not allowed with tax credit for payments of estate tax on foreign countries?
points: 1
A resident
alien
A non-resident
citizen
An alien who was a resident of his own country at the date of
death
An American residing in the Philippines at the date of
death

3. Vlad died on October 20, 2018. During his lifetime, upon knowing that he had Stage 4 cancer, sold
his Lamborghini car to his son for P4,000,000. The fair market value of the car at the time of sale is
P3,000,000 while it is already valued at P5,000,000 at the time of death. The amount that will be
added to gross estate is: points: 1
P500,000
P0
P800,000
P1,200,000

4. Vlad died on October 20, 2018. During his lifetime, upon knowing that he had Stage 4 cancer, sold
his Lamborghini car to his son for P4,000,000. The fair market value of the car at the time of sale is
P3,000,000 while it is already valued at P5,000,000 at the time of death. if the consideration is
fictitious, how much will form part of gross estate? points: 1
P1,000,000
P2,000,000
P5,000,000
None

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5. Statement 1: A sale is a form of transfer transaction that requires payment of transfer tax
Statement 2: Transfer tax accrues at the time of transfer of the decedent’s property or rights to the
heir points: 1
Only statement 1 is
correct
Only statement 2 is
correct
Both statements are
correct
Both statements are
incorrect

6. Which of the following is a valid will? points: 1

That which reduces the legitime of compulsory
heirs
That which increase the share of one heir without impairing the legitime of the other
heirs
That which transfer the legitime of one heir to the other
heir
That which impair the legitime of compulsory
heirs

7. One of the properties left by a decedent was gutted by fire during the settlement of the estate. The
executor decided to claim the losses in computing income tax of the estate. One of the heirs objected
to the executor since even before deducting the said losses, the taxable income of the estate is
already zero. However, the executor stood his ground insisted on claiming the losses as deduction in
computing income tax. Which of the following statements is correct? points: 1
The losses can no longer be deducted in computing the estate
tax.
The losses can still be claimed as deduction in computing the estate tax since there is not prohibition against
it under the tax laws, rules and regulations.
The losses can still be claimed as deduction in computing the estate tax since there was no tax benefit
resulted in the deduction in the computation of income tax.
The losses cannot be claimed as deduction both in the computation of estate tax and income tax since it
occurred during the settlement of the estate.

8. Who among the following transferors is not liable for estate tax on the property transferred during
his lifetime? points: 1
The testator who bequeaths property to his heirs in a last will and testament executed and probated during his
lifetime.
The donor who reserves his right to amend or revoke the donation of property in favor of the
done.
The donee of an appointed property who is required under a power of appointment to transfer such property
upon death to his eldest child.
Answer not given

9. The following properties will be classified uniformly under Conjugal Partnership of Gains and
Absolute Community of Property, except: points: 1
Property inherited or received as donation during the
marriage
Property acquired from labor, industry, work, or profession of
spouses
Fruits or income due or derived during the marriage coming from common
properties
Fruits or income due or derived during the marriage coming from exclusive
properties

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10. Which of the following would prohibit deductibility of vanishing deductions? points: 1
The property is in the
Philippines
The period from preceding decedent to the current decedent is within 5
years
Proper vanishing deduction has been deducted on the same property from the preceding
decedent
The estate or donor’s tax has been paid previously on the same
property

11. 25. Marlon, married on June 5, 2016 died on April 29, 2018 with the following data: Gross estate –
conjugal, P3,000,000; exclusive, P2,000,000. Said amount includes a land which he received as
wedding gift from his father, valued at P540,000. His father mortgaged the land for P20,000 which was
paid by Marlon before his death. He mortgaged again the land for P50,000 after marriage but was able
to pay only P20,000 until his death. Losses and indebtedness claimed (excluding the unpaid mortgage)
amounted to P170,000. The vanishing deduction should be: points: 1
P399,360
P384,000
P299,520
P288,000

12. The law provides for an extension of payment of estate tax. The period of extension shall not
exceed: points: 1
5 years in case of judicial settlement, and 2 years in case of extrajudicial
settlement
2 years in case of judicial settlement, and 5 years in case of extrajudicial
settlement
2 years in case of judicial settlement, and 3 years in case of extrajudicial
settlement
3 years in case of judicial settlement, and 2 years in case of extrajudicial
settlement

13. On November 20, 2024, while the couple were talking about the possibility of having another child,
P. Nalad suffered a cardiac arrest and died 3 days later, without any last will and testament. Makiri’s
paid the taxes due and the estate was distributed to his legal heirs. Thereafter, Makiri went back to
the practice of profession and continued operating the commercial building. points: 1
November 20,
2025
November 23,
2025
May 20,
2025
May 23,
2025

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14. In a transfer in contemplation of death, revocable transfer and transfer under a general power of
appointment, there are rules to observe to determine what amount to include in the gross estate,
which is not a rule to observe? points: 1
If the transfer was in the nature of a bona fide sale for an adequate and full consideration in money or
money’s worth, no value shall be included in the gross estate
If there was no consideration received on the transfer as in donation inter-vivos, the value to include in the
gross estate shall be the fair market value of the property at the time of transfer
If the consideration received on the transfer was less than adequate and full, the value to include in the gross
estate shall be the excess of the fair market value of the property at the time of decedent’s death over the
consideration received
If there was no consideration received on the transfer as in donation mortis causa, the value to include in the
gross estate shall be the fair market value of the property at the time of the decedent’s death

15. Under absolute community of property, which of the following is a community property? points: 1
Property inherited by the surviving spouse during the
marriage
Property bought during the marriage using the money inherited by the decedent before
marriage
Personal belongings (e.g. clothes, shoes, etc.) bought during the marriage for the exclusive use of the
decedent
Jewelry inherited by the decedent during the
marriage

16. On February 14, 2014, A donated to B a residential land with a fair market value of P2M. On
February 14, 2018, A dies. At the time of A’s death, the residential land has a fair market value of P3M.
as a result, the estate of A points: 1
Will include the residential land at P2M as part of A’s gross
estate
Will claim a vanishing deduction rate of
40%
Will claim a vanishing deduction rate of
20%
Cannot claim deduction for property previously
taxed

17. A insured his life for P10M in case A dies, the proceeds of the life insurances shall be: points: 1
Excluded from gross estate if the beneficiary is the estate, executor or administrator whether revocable or
irrevocable
Part of gross income if the beneficiary is a third person and the designation is
revocable
Part of the gross estate if the beneficiary is a third person and the designation is
irrevocable
Excluded from gross income whether beneficiary is revocable or
irrevocable

18. The amounts withdrawn from the deposit accounts of decedent subjected to the 6% final
withholding tax imposed under Section 97 of NIRC, shall be: points: 1
Excluded from the gross estate for purposes of computing the estate
tax.
Included from the gross estate for purposes of computing the estate
tax.
Claimed as tax credit against estate tax
due.
Claimed as deduction from the gross
estate.

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19. The decedent dies on May 31, 2018, the available cash of the estate is insufficient to pay the total
estate tax due. Which of the following is correct? points: 1
Payment by installment shall be allowed within two (2) years from statutory date for its payment without civil
penalty and interest.
Payment by installment shall be allowed within two (2) year from statutory date for its payment without civil
penalty and interest.
Payment by installment shall be allowed within one (1) year from statutory date for its payment without civil
penalty and interest.
Payment by installment shall not be allowed under the
TRAIN.

20. Pedro, single, died leaving properties he inherited 4 ½ years ago which had fair market value of
P800,000 at the time of his death (P650,000 at the time of inheritance). Pedro mortgaged the property
for P50,000 when he already owned it. He paid the mortgage indebtedness before he died. Other
properties in his gross estate had fair market value of P1,000,000. The total expenses, losses,
indebtedness, taxes and transfer for public purpose amounted to P300,000. How much was the
vanishing deduction? points: 1
P108,333
P225,000
P208,333
P508,333

21. The administrator of the Estate of Juan Santos claims as deduction from the gross estate a
receivable from a person who absconded. His assertion is that the claim against that person can no
longer be collected. He also explains that for income tax purposes bad debts are deductible from the
gross income so the receivable from a person who absconded shall also be treated in the same manner
as in estate tax. Despite the administrator’s contention the BIR disallowed as deduction the claim
against a person who absconded. Is the BIR correct? points: 1
Yes, to be allowed as deduction from the gross estate the claim must be against an insolvent debtor and that
the incapacity of the person must be a fact and not merely alleged.
No, not to allow it to be deducted from the gross estate will be a great injustice because of the fact that
collection is almost possible.
No, all items that are deductible from gross income for income tax purposes are also allowed to be deducted
from the gross estate.
Yes, the regulations are not clear and it requires BIR ruling for such claim to be allowed as
deduction.

22. Juan Dela Cruz procured a life insurance upon his own life. He designated his estate’s executor as
an irrevocable beneficiary. For estate tax purposes, the proceeds of life insurance is: points: 1
Included in the gross estate of Juan Dela Cruz because when the executor of the estate is beneficiary, the
proceeds are included in the gross estate regardless of the designation.
Not included in the gross estate of Juan Dela Cruz because the designation of the beneficiary is
irrevocable.
Included in the gross estate of Juan Dela Cruz because proceeds of life insurance are always subject to estate
tax.
Not included in the gross estate because, as a rule, proceeds of life insurance are generally not subject to
estate tax.

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23. Mr. Mayuga donated his residential house and lot to his son and duly paid the donor's tax. In the
Deed of Donation, Mr. Mayuga expressly reserved for himself the usufruct over the property for as
long as he lived. Describe the donated property from the taxation perspective. points: 1
The property will form part of Mr. Mayuga's gross estate when he
dies.
The property will not fom1 part of Mr. Mayuga's gross estate when he dies because he paid the donor's
tax.
The property will form part of Mr. Mayuga's gross estate because he died soon after the
donation.
The property will not form part of Mr. Mayuga's gross estate because it is no longer
his

24. Which among the following reduces the gross estate (not the net estate) of a citizen of the
Philippines for purposes of estate taxation? points: 1
Transfers for public
use
Property previously
taxed
Standard deduction
Capital of the surviving
spouse

25. Lenin died on July 31, 2011. His estate tax return should be filed within: points: 1
six months from filing of the notice of
death.
sixty days from the appointment of an
administrator.
six months from the time he died on July 31,
2011.
sixty days from the time he died on July 31,
2011.

26. Don Fortunato, a widower, died in May, 2011. In his will, he left his estate of P100 million to his
four children. He named his compadre, Don Epitacio, to be the administrator of the estate. When the
BIR sent a demand letter to Don Epitacio for the payment of the estate tax, he refused to pay claiming
that he did not benefit from the estate, he not being an heir. Forthwith, he resigned as administrator.
As a result of the resignation, who may be held liable for the payment of the estate tax? points: 1
Don Epitacio since the tax became due prior to his
resignation.
The eldest child who would be reimbursed by the
others.
All the four children, the tax to be divided equally among
them.
The person designated by the will as the one
liable.

27. Mr. Mayuga donated his residential house and lot to his son and duly paid the donor's tax. In the
Deed of Donation, Mr. Mayuga expressly reserved for himself the usufruct over the property for as
long as he lived. Describe the donated property from the taxation perspective. points: 1
The property will form part of Mr. Mayuga's gross estate when he
dies.
The property will not form part of Mr. Mayuga's gross estate when he dies because he paid the donor's
tax.
The property will form part of Mr. Mayuga's gross estate because he died soon after the
donation.
The property will not form part of Mr. Mayuga's gross estate because it is no longer
his.

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28. Who shall file the estate tax return? points: 1
Executor, or administrator, or any of the legal
heirs
Creditors of the
decedent
Personal secretary of the
decedent
Debtors of the
decedent

29. If the decedent died on or after January 1, 2018, the estate tax return should be filed points: 1
At the time of
death
Within 30 days after
death
Within six months after
death
Within one year after
death

30. An estate tax return is not necessary in the following instance points: 1
Donation of P50,000
cash
Transfer of motor vehicle valued at
P130,000
Both a and
b
Neither a nor
b

31. In filing the estate tax return under the TRAIN Law, a CPA certificate is required when points: 1
Gross estate exceeds P2,000,000
Gross estate exceeds P5,000,000
Gross estate exceeds P10,000,000
Gross estate reaches
P2,000,000

32. Can the estate tax be paid in installment? points: 1

Yes, in case the available cash of the estate is not sufficient to pay its estate tax
liability
Yes, at the option of the heirs with corresponding interest
charges
No, tax is the lifeblood of the State, hence, collection cannot be delayed under any
circumstance
Answer not given.

33. In case of a resident decedent, the administrator of executor shall register the estate of the
decedent and secure new TIN from the points: 1
Office of the
Commissioner
RDO where the administrator or executor is
registered
RDO where the decedent was domiciled was domiciled at the time of his
death
Duly authorized treasurer of the city or municipality where the decedent is domiciled at the time of his
death

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34. ________________________ is a tax on the right of the deceased person to transmit his/her estate to
his/her lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by
law as equivalent to testamentary disposition. points: 1
Transfer
Tax
Estate
Tax
Donor’s
Tax
Inheritance
Tax

35. Statement 1: Estate tax is not a tax on property. Statement 2: Estate tax is a tax imposed on the
privilege of transmitting property upon the death of the owner. points: 1
Both statements are
true
Both statements are
false
Only statement 1 is
true
Only statement 1 is
false

36. All the following are mandatory requirements for real properties, if any, except for one points: 1
Certified true copy/ies of the Transfer/Original/Condominium Certificate/s of Title of real property/ies (front and
back pages), if applicable;
Certified true copy of the Tax Declaration of real properties at the time of death, if
applicable;
Certificate of Deposit/Investment/Indebtedness owned by the decedent and the surviving spouse, if
applicable;
Certificate of No Improvement issued by the Assessor's Office where declared properties have no
improvement

37. What is the base for Estate Tax? points: 1

Gross Estate determined as of the time of death of
decedent
Net Estate determined as of the time of death of
decedent
Either a or
b
Neither a nor
b

38. What is not excluded from gross estate? points: 1

GSIS proceeds/ benefits
Accruals from SSS
Proceeds of life insurance where the beneficiary is revocable
appointed
Proceeds of life insurance under a group insurance taken by employer (not taken out upon his
life)

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39. What will be not used as basis in the valuation of property? points: 1
The properties comprising the gross estate shall be valued based on their fair market value as of the time of
decedent’s death.
If the property is a real property, the appraised value thereof as of the time of death shall be, whichever is the
higher of – (1) The fair market value as determined by the City Treasurer, or (2) The fair market value as
shown in the schedule of values fixed by the provincial and city assessors.
In the case of shares of stocks, the fair market value shall depend on whether the shares are listed or unlisted
in the stock exchanges.
For shares which are listed in the stock exchanges, the fair market value shall be the arithmetic mean
between the highest and lowest quotation at a date nearest the date of death, if none is available on the date
of death itself.

40. Which is not a requisite for deductibility of claims against the Estate? points: 1
The liability represents a real obligation of the deceased existing at the time of
death
The liability was contracted in good faith and for adequate and full consideration in money’s
worth
The claim must be a debt or claim which is valid in law and enforceable in
court
The indebtedness must not have been condoned by the creditor or the action to collect from the decedent
must not have prescribed

41. All are the allowed deductions for a non-resident alien, except for one. points: 1
Standard deduction equivalent to
P500,000
Property previously
taxed
Transfer for public
use
Funeral expenses within the
threshold

42. Succession which results from the designation of an heir, made in a will executed in the form
prescribed by law is known as: points: 1
legal or intestate
succession
Testamentary succession
Mixed succession
Ordinary succession

43. Which is not true about relationships points: 1

The relation subsisting between son, father and grandfather, in the order is an example of an ascending lineal
consanguinity
Consanguinity is the relation of persons ascending from he same stock or common
descendants
Collateral consanguinity is that which subsists between persons who have the same ancestors, but who do not
descend or ascend one from the other
Affinity is connection existing in consequence of a marriage between each of the married spouse and kindred
of the other.

44. If the surviving heirs in an intestate succession are the parents and a legitimate child of the
descendent, what is the share of the parents in the legitimes? points: 1
1/3
1/2
1/4
None

9
45. Which is not authorized to take charge of the estate during intestate period? points: 1
executor
court
administrator
heirs

46. Refer to the attached picture: points: 1

P1,000,000
P800,000
P600,000
P350,000

47. Refer to the attached picture: points: 1

P10,700,000
P6,600,000
P
6,100,000
5,850,000

48. Decedent died in 2018 leaving a will which directed all real estate owned y him not to be disposed
or sold for a period of 2 years after his death and ordered that the property be given to Juan Dela Cruz
after 3 years. In 2018, the estate left by the decedent had a fair market value of P500,000. In 2020, the
fair value of the said estate increased by P4,500,000 and the BIR Commissioner assed thereon estate
tax on assessed value of P4,000,000 in 2018. What would be the correct amount of the gross estate?
points: 1
P5,000,000
P4,000,000
P4,500,000
P500,000

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49. Refer to the attached picture: points: 1

P120,000
P250,000
P300,000
P350,000

50. A revocable transfer was made for a consideration of P100,000, fair market values of the property
at the time if transfers and at the time of death were P250,000 and P300,000, respectively. In the
gross estate, the value of the property was points: 1
P100,000
P250,000
P200,000
Exempt

51. Among the properties included in the gross estate of the decedent at the time of death is a three-
story commercial building with a fair market value of P12,000,000. During the settlement of the estate
and before the last day of paying the estate tax, the said property is destroyed by fire. The fair market
value at the time of the incident was P13,000,000. The amount that should be included as part of the
gross estate is points: 1
P0
P12,000,000
P12,500,000
P13,000,000

52. Among the properties included in the gross estate of the decedent at the time of death is a three-
story commercial building with a fair market value of P12,000,000. During the settlement of the estate
and before the last day of paying the estate tax, the said property is destroyed by fire. The fair market
value at the time of the incident was P13,000,000. The amount of deductible loss will be points: 1
P0
P12,000,000
P12,500,000
P13,000,000

53. Which is wrong? deduction for transfer for public use points: 1
Means legacy is a last will and testament to the
government
Means device is a last will and testament the
government
Includes any kin of transfer to the government for public
purpose
Will not include legacies to charitable
institutions

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54. Upon effectivity of the TRAIN Law, which is not true about standard deduction? points: 1
it need not be
substantiated
it does not apply to non-resident alien
decedent
it must be reflected in the estate tax
return
Answer not given.

55. Only one is correct. A deduction for family home points: 1

shall be allowed if the family home is in the
Philippines
shall be at a maximum of P10,000,000 based on
cost
May be allowed for two family homes (one in the city another in the province) both in the Philippines and with
certification of barangay captains
Shall be deducted at the lesser than P10,000,000 if , with vanishing deduction and unpaid mortgage or
indebtedness, the vale of the family home is already reduced to zero.

56. Refer to attached picture: points: 1

P3,800,000
P4,280,000
P4,780,000
P5,280,000

57. Refer to attached picture: points: 1

P96,000
P66,000
P1,500,000
P1,600,000

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58. Refer to attached picture: points: 1

P8,800,000
P8,600,000
P8,700,000
P10,300,000

59. Refer to the attached picture: points: 1

P2,800,000
P2,500,000
P3,800,000
P3,500,000

60. Refer to the attached picture: points: 1

P7,500,000
P6,800,000
P7,800,000
P6,800,000

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61. Refer to attached picture: points: 1

P225,000
P250,000
P2,025,000
P2,050,000

62. Refer to attached picture: points: 1

P1,540,000
P3,080,000
P4,500,000
P0

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63. Refer to attached picture: points: 1

P
1,540,000
P
3,080,000
P
4,500,000
P0

64. Refer to attached picture: points: 1

P100,000
P200,000
P900,000
P1,800,000

65. Which is not an exclusive property of a spouse? points: 1

that which is brought to the marriage as his or her
own
that which each acquired during the marriage by gratuitous
title
that which is acquired by right of
redemption
That which is purchased with the spouses' common
fund

15
66. Which of the following distinguishes conjugal property from community property? points: 1
Properties inherited during
marriage
Those acquired through occupation during
marriage
Fruits of exclusive
property
income earned by each spouse during
marriage

67. The gross estate of a decedent who was married at the time of death will be composed of points: 1
His capital property, the wife's paraphernal property and the common
property
His capital property and the common
property
Common
property
His capital
property

68. Which of the following is not a remedy against double taxation points: 1
estate tax
credit
vanishing deduction
delivery of property from the fiduciary heir to fideicommissary in a fideicommissary
substitution
transfer for public
use

69. Estate tax is imposed upon the points: 1

Decedent
Property or rights
transferred
Right to transfer property upon
death
privilege to receive
inheritance

70. The personal property of a non-resident, not citizen of the Philippines would not be included in the
gross estate if: points: 1
The intangible personal property is in the
Philippines
The intangible property is in the Philippines and the reciprocity clause of the estate tax
applies
The tangible property is in the
Philippines
The personal property is shares of stocks of a domestic corporation 90% of whose business is in the
Philippines

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