ACCOUNTANCY DEPARTMENT

TRANSFER, BUSINESS AND PREFERENTIAL TAXATION

DEDUCTIONS - GROSS ESTATE QUIZZER

1. In case of a simple loan, which of the following requirements/documents need to be

complied with or submitted?
I. Debt instrument duly notarized at the time the indebtedness was incurred;
II. Duly notarized Certification from the creditor as to the unpaid balance as of the time
of death;
III. Proof of financial capacity of the creditor to lend the amount at the time the loan
was granted, as well as its latest audited balance sheet v,;ith a detailed schedule of
its receivable showing the unpaid balance of the decedent-debtor;
IV. A statement under oath executed by the administrator or executor of the estate
reflecting the disposition of the proceeds of the loan if said loan was contracted
within three (3) years prior to the death of the decedent.
a. I, II, III and IV
b. III and IV only
c. I and II only
d. I and IV only

2. The following are the requisites in order for claims against the decedent's estate to be
deductible. Except which one?
a. They must be existing against the estate.
b. They must be reasonably certain as to amount.
c. They must have been prescribed.
d. They must be enforced by the claimant.

3. The gross estate of the nonresident alien is P3,000,000 located in the Philippines and
P2,000,000 located outside the Philippines. The entire amount of ELITE deductions is
P500,000 and devices to Philippine Government is P100,000. How much is the allowable
deduction against the Philippine gross estate?

4. At what amount is allowed as ordinary deduction from P3,500,000 gross estate of a resident
alien decedent with unpaid funeral expense of P220,000 actual for internment, burial lot
and mourning apparels?

5. The estate is P3,150,000 after payment of funeral expenses amounting to P175,000. The
deductible funeral expense is:

6. The conjugal portion of the estate is P2,000,000 and the exclusive portion is P1,000,000.
Actual funeral expense is P180,000. How much would be the allowed deductible funeral
expenses?

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7. Mr. Estrado, an unmarried resident of the Philippines, died on January 15, 200A leaving real
properties in Manila with fair market value of P1,560,000. Deductions claimed by the
administrator of the decedent estate are as follows: medical expenses during the
decedent’s sickness paid out of the decedent’s cash available at date of death 45,000;
expenses during the wake paid out of the decedent’s cash 85,000; memorial plan already
paid 40,000; claims against insolvent persons 100,000.

If five percent (5%) of the gross estate is P130,000 and the total amount incurred is
P220,000 where P30,000 thereof is still unpaid, the amount that can be claimed as
deduction from gross estate would be:
8. Funeral expense
9. Claims against estate

10. To defray the expense incurred in connection of the death of the owner, the real property,
which is the only item of the estate, was sold. The proceeds of sale are P1,780,000, net of
capital gains tax and 5% broker’s fee. The total deductible judicial expense is
Yuma Yao, a citizen of the Philippines, died on January 1, 200A leaving properties with a
value of P10M which is under litigation. His executor presented the following judicial
expenses to determine the allowed deductible amount:

Philippine judicial proceedings- May 1, 200A:

Agreed contract price of lawyers service 10% of the value of the property
Including:
Acceptance fee P 80,000
Court appearances fee 20,000
Excluding:
Extra-judicial settlement of the estate 500,000

How much is the amount deductible judicial expenses if only 30% of the agreed contract
price is paid

11. Part of the gross estate is a jewelry pawned to a local pawnshop for P48,000. It is the
practice of the pawnshop to extend loan at 40% of the fair value of the collateral. Prior to
the distribution of the estate, the jewelry was redeemed from the pawnshop but was
snatched along the way. How much is the deductible loss?

12. Mina Malas died due to car accident. His assets prior to death were as follows:
Family home Cash in bank Car
Before death P2,000,000 P500,000 400,000
Date of Death 2,000,000 300,000
How much is the deductible loss from gross estate?

Family home Cash in bank Apartment

Date of Death P1,900,000 P3,000,000
Date of Estate tax 2,000,000 P1,800,000 0
payment
The apartment was raged by fire death but compensated by insurance up to 60% of its
value, and a scrap value of P100,000 was recovered. How much is the deductible loss from
gross estate?

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13. The following are liabilities related to the death of a resident citizen: Unpaid mortgage on
the real property included in the gross estate 500,000; accounts payable condoned by the
creditors 200,000; unpaid medical expenses incurred related to the sickness that cause the
death of the decedent 200,000; unpaid funeral expenses 100,000. How much could be
deducted as claims against the estate?

14. The following items are submitted by Mrs. Sementerio, the surviving spouse of Mr.
Sementerio, regarding the claims against the estate: excess unpaid funeral expense over
limit 120,000; excess unpaid medical expense over limit 100,000; loans from Metro Bank
(not notarized per bank’s policy) 500,000; interest on loans payable in the bank 30,000;
loans from creditors that has been prescribed 200,000. The correct claims against the estate
for estate tax computation is

15. Part of the gross estate is P500,000 accounts receivable from a debtor. The P500,000 is
subsequently proven not fully collectible because of financial condition of debtor as follows:
assets of the debtor 1,500,000; taxes payable by the debtor 500,000; total liabilities
including taxes 2,000,000. How much would be the deductible amount from the gross
estate as bad debts?

16. What would be the amount to be deducted from the gross estate of a decedent whose
collectible from a debtor is P160,000 and have the same debtor was subsequently declared
by court as insolvent for having total liabilities of P400,000 and total properties of P50,000?

Mr. Shy used his exclusive real property as a collateral to acquire a loan accounting to
P1,000,000 which was used to finance their family business. At the time of his death, the
remaining unpaid mortgage loan was P800,000 and the fair value of the exclusive real
property was P2,800,000 of which P400,000 was donated to the Lipa City Government.
Assuming that the fair value of the conjugal property left to Mrs. Shy was P3,500,000 and
the funeral expense was P180,000, how much is the value of the exclusive and conjugal
properties after ordinary deductions?
17. Exclusive
18. Conjugal

19. During the settlement of the inheritance, the following liabilities are outstanding: unpaid
real property tax incurred prior to date of death 100,000; donor’s tax prior to date of death
80,000; income tax on income earned by the estate from date of death to date immediately
before distribution to heirs 50,000; estate tax 25,000.

20. A Filipino citizen received a real property located in Taiwan with P2,000,000 market value
two and a half years ago when inherited. A P300,000 mortgage was attached to the
inherited property of which P200,000 was paid. If the said Filipina died with funeral expense
of P180,000 and the said inheritance property has a market value of P3,000,000 at the time
of his death, how much is the vanishing deduction?

21. The only item included in the gross estate is a real property inherited by the present
decedent more than 2 years prior to his death. The real property was taxed in the previous
transfer at value of P1,000,000. The present value of the same property at date of death of
the present decedent is P3,000,000. The total actual and ordinary deductions from the
gross estate is P150,000. How much could be allowed as the amount of vanishing
deduction?

22. Part of the P5,000,000 gross estate is a P2,100,000 real property inherited previously
subjected to transfer taxes 42 months ago at fair value of P2,400,000. The real property has
been subjected to mortgage by the previous owner for P500,000 assumed by the heir who

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 just died recently. The unpaid balance of the mortgage is P100,000at the date of death.
Assuming that the funeral expense and judicial expense are P300,000 and P100,000,
respectively. How much is the vanishing deduction?

23. Two and a half years ago, Wah Ligo, a Filipino citizen, inherited a real property located in
the Philippines with a P2,000,000 market value. He assumed the P300,000 mortgage
attached to the inherited property and paid P200,000 of it. If Ligo died with funeral expense
of P180,000 and the said inherited property is his only property with market value of
P3,000,000 at the time of his death, how much is the amount of ordinary deduction subject
to proportionate computation?

24. Val Luctor died leaving real properties with a cost of P500,000. The total land area is 1,000
square meters with a fair market value of P2,000,000. A portion of the real estate
equivalent to 200 square meters is assigned in the will to be transferred to the City of
Baguio which has jurisdiction over the property. The amount of deductible transfer for
public use would be:

25. Nama Yapa, died with the following donations stated in his Will: Donation to Church
100,000; Donation to the City of Manila 200,000; Donation to Korean Government 300,000;
Donation to Kapuso Foundation 400,000. How much is the amount of transfer for public use
deductible from gross estate?

26. Information regarding a Filipino citizen’s gross estate and expenses are as follows: Gross
estate 300,000; Funeral expenses 200,000; Judicial expenses (40% use to settle dispute
among heirs) 250,000; Bad debts (1/3 unrecoverable) 150,000; Amount received under RA
4917 300,000. How much is the ordinary deductions?

27. The administrator of X, a decedent resident Filipino citizen, shows the following gross estate
including unpaid expenses and obligations: Gross estate 3M; Funeral Expenses 0.2M;
Medical expenses (within one year) 0.65M; Claims against the estate 0.3M. How much is
the amount that shall no longer be allowed as deduction from the gross estate and cannot
be classified as claims against the estate?

28. A nonresident Filipino died leaving a net community estate of P4,000,000 after deducting
actual allowable deductions amounting to P2,500,000. Special deductions excluding
standard deduction was P1,500,000. How much is the amount of standard deduction
allowed?

29. A nonresident alien died leaving a net estate of P2,000,000 in the Philippines, after
deducting proportionate deductions amounting to P500,000. How much is the amount of
standard deduction allowed?

30. What is the allowable deduction for family home with P1.2M FMV at the date of death of
decedent survived by spouse if such family home was inherited by the decedent during
marriage at P0.8M?

31. The decedent’s P3M gross estate is comprised of P1.6M personal properties and P1.4M
family home, (P1M building which is conjugal, and P0.4M land, which is exclusive to the
decedent). How much could be deducted from the gross estate as family home?

32. How much is the amount of family home subject to estate tax if the said family home has a
value of P2M of which P0.8M represents the exclusive lot of the decedent and the balance
represents the conjugal house?

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33. Prior to the date of death, a total of P300,000 worth of medical expenses were incurred. At
the date of death, P100,000 of medical expenses are still unpaid. How much of the above
amounts could be deducted from the gross estate?

34. Prior to the date of death, a total of P600,000 worth of medical expenses were incurred. At
the date of death, P100,000 of medical expenses are still unpaid. How much of the above
amounts could be deducted from the gross estate as claim against the estate?

35. Date of Death September 30, 2014. What is the correct amount of allowable medical
expenses for the following hospital bills incurred: October 2013 to December 2013 100,000;
March 2013 to May 2013 450,000; November 2012 to December 2012 150,000.

36. The gross estate consists of P2,000,000 conjugal and P1,000,000 exclusive to the decedent.
Part of the last will and testament is the transfer of P500,000 of the gross estate to the
government. If there were no other actual deductions, how much would be the deductible
share of the surviving spouse?

37. A citizen died leaving P5,000,000 conjugal estate to his wife. The estate included the family
home valued at P1,500,000. The funeral expenses amounted to P220,000. The share of
surviving spouse would be

38. The following communal properties are available upon the death of Mr. Campo Santo, a
Filipino citizen: residential house and lot as family home 1,000,000; land donated to the
government 500,000; claims against insolvent person 200,000; amount received under RA
4917 500,000. Based on the data, how much is the total amount of special deductions?

Mr. Tuso presents the following properties and expense to the BIR in relation to the death
of his wife: revocable donation to the Ramon Magsaysay Foundation 1,000,000; proceeds of
life insurance from SSS- revocable 5,000,000; family home (exclusive property of Mrs. Tuso)
1,000,000; SSS death benefits 500,000; benefits under RA 4917 500,000; transfers in
contemplation of death 2,000,000; donation to the government 1,000,000; medical expense
(40% unpaid, 100% incurred within 1 year) 400,000; funeral expense 100,000.

39. Total ordinary deduction amounts to

40. The total special deduction is

The following information is reported by Ali Mango, the executor of a Pahi Ngana, the
decedent:
Within Without
Gross estate- including family home P5,000,000 P3,000,000
Claims against the estate 3,000,000 1,000,000
Donation to Philippine government 500,000 200,000
Medical expenses 300,000 700,000

41. If Pahi Ngana is a resident alien, how much is the total amount of allowable deductions
from his gross estate?

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42. If Pahi Ngana is a nonresident alien, how much is the total amount of allowable deductions
from his gross estate within?

Sumir Ku, an unmarried Japanese residing in the Philippines, died with the following
information regarding his estate:
Japan Philippines Total
Gross estate P2,000,000 P8,000,000 P10,000,000
Funeral expenses 200,000 300,000 500,000
Unpaid loans 300,000 700,000 1,000,000
Donations to governments:
Japan 100,000
Philippines 400,000 500,000
Medical expenses 500,000 300,000 800,000

The gross estate within included a family home of P2,000,00. The administrator of Ku also
presented P600,000 representing judicial expense incurred within and outside the
Philippines. The allocation of the deductions against the gross estate of Mr. Ku would be
43. Japan
44. Philippines

45. Nor Korea, a nonresident Korean national, died in the Philippines. His administrator showed
to the Philippine Government the following assets and expenses:
Within Without
Properties P5,000,000
Funeral expenses 300,000
Mortgage loan 200,000
Claims against estate 500,000

How much is the net estate subject to estate tax in the Philippines?

46. The net taxable estate of Diva Ding, a Filipino unmarried person, amounted to P3,000,000.
Other information is as follows: Family home 2,000,000; Total Ordinary Deductions
1,500,000; Medical expenses (within 1 year) 500,000.

47. The net taxable estate of Naba Yagen, a Filipino married person, amounted to P4,000,000.
Other information is as follows: share of surviving spouse 2M; family home- exclusive of
Naba Yagen 1.5M; conjugal ordinary deductions 1M; exclusive ordinary deductions 0.75M;
medical expenses (within 1 year) 0.6M; amount received under RA 4917 0.25M. How much
is the amount of net conjugal estate?

48. Chit Sharon’s gross estate is P3,000,000. Her executor is claiming the following as funeral
expenses related to the death of Chit:
Hospitalization incurred during the last 3 months prior to Chit’s P50,000
death 50,000
Burial lot, 20% are paid from friends contribution 20,000
Expenses for wake before burial 2,000
Thank you cards to the sympathizers 1,000
Telegrams and cables sent to the relatives 3,000
Mourning apparel of the surviving spouse and children 1,000
Mourning apparel of the relatives 2,500
Entertainment expenses during the rites and ceremonies during the
burial

Required: How much is the allowable funeral expense?

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 Mr. Pru Buto, a Filipino decedent, died on November 1, 200A leaving the following assets to
his surviving spouse and 2 minor children: family home 5M; family business 10M. His wife
presented the following deductions:
January until November until
October 200A December 200A
Unpaid taxes:
Income tax P200,000 P100,000
Donor’s tax 100,000 50,000
Estate tax 800,000
Funeral expenses:
Memorial plan 50,000
Wake expenses 100,000
Accrued expenses 80,000 20,000
Medical expenses:
Hospital bills 400,000
Autopsy 30,000

Mrs. Buto wanted to settle all of the obligations attached to the estate on January 31, 200B.

Required: Compute for the following amounts:

49. Ordinary deductions
50. Special deductions

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