Transfer and Business TaxationAccountancy ProgramSchool of Business and GovernanceAteneo de Davao UniversityDEPARTMENTAL EXAMINATION

Name: _______________________________________________ Year & Section: ___________________

General Instruction: Write your answers in the space provided below. No erasures allowed. Any alteration in the answers shall be invalidated and warrants a 5-point deduction.1.

21.41.61.

2.

22.42.62.

3.

23.43.63.

4.

24.44.64.

5.

25.45.65.

6.

26.46.66.

7.

27.47.67.

8.

28.48.68.

9.

29.49.69.

10.

30.50.70.

11.

31.51.71.

12.

32.52.72.

13.

33.53.73.

14.

34.54.74.

15.

35.55.75.

16.

36.56.76.

17.

37.57.77.

18.

38.58.78.

19.

39.59.79.

20.

40.60.80.

You know you're in love when you can't fall asleep because reality is finally better than your dreams. Dr. SeussI. Page 2 | 9

II. ESTATE TAX

1. Which of the following statements is/are true?a. Brothers and sisters can become heirs in the legal successionb. An oral will corroborated by witnesses is validc. In the absence of a legitimate offspring, the illegitimate child succeeds the rank of the former in the succession over the decedents parents and surviving spouse.d. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing2. Which of the following is/are incorrect?a. Estates and trusts are considered taxable entities under the National Internal Revenue Code.b. An estate that is under judicial administration is not taxablec. An administrator is appointed in the last will and testament by the decedent, whereas an executor is appointed by the court d. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing3. The deductible expenses of an estate may consist of:a. Deductible expenses allowed to an individual taxpayerb. Income distributed to the beneficiariesc. Both (a) and (b)d. Neither (a) nor (b)4. Which of the following is/are false?a. No income is realized when the estate is distributed to the legal heirsb. An estate is entitled to an exemption of Php 50,000 just like an individual taxpayerc. A fiduciary may be an executor, administrator, or trustee d. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing5. Which of the following statement is/are true?a. Legitimate and illegitimate children have equal shares under the intestate distribution.b. In all cases, the surviving spouse shall receive one-half of the net distributable estatec. The presence of a legitimate son precludes the ascendants from the share of the estate d. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing6. Donation mortis causa transfer of property is effecteda. When the property is received by the heirb. When the court awarded the ownership of property to a particular heirc. Upon the death of the decedentd. Upon payment of estate tax7. Accumulated properties during the lifetime of the decedent is intended to his beloved ones is a succession principle ofa. Public Orderb. Implicit Ownershipc. Socio-economicd. Family Relations8. The value of the common stock not listed in the stock exchange included in the gross estate at the time of death would be:a. Mean Valueb. Book Valuec. Par Valued. Market Value9. Which of the following statements is/are false?a. Shares of stocks acquired by a non-resident alien from a domestic corporation are taxable in the Philippinesb. The amount received under Rep. Act 4917 is not taxable, hence, it shall not be included as part of the gross estatec. If there is reciprocity, all properties within of a nonresident alien are not subject to Philippine estate taxd. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing10. Which of the following statement is/are true?a. Under the conjugal property regime, the properties belonging to each spouse before marriage shall be treated as exclusive properties, but the income derived therefrom during marriage shall be conjugal propertiesb. When the designation of a beneficiary is ambiguous, the presumption is that it is a revocable designationc. A property that is subject to a general power of appointment is to be included as part of the gross estated. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing11. One of the following items mark the significant difference of the taxation of an estate from an individual taxpayer:a. Taxable Incomesb. Deductible Expensesc. Personal Exemptiond. None of the foregoing12. The taxable year of an estate or trust shall be:a. Calendar Yearb. Fiscal Yearc. Either (a) or (b)d. Neither (a) or (b)13. Which of the following statements is/are true?a. An estate must adopt the calendar year as its taxable periodb. In a revocable trust, the grantor shall include the trust income in his personal income tax return.c. An employees trust which forms part of a pension plan of an employer for the benefit of his employees is exempt from income tax.d. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing14. Which of the following items is/are false?a. Funeral expenses incurred after the interment are not deductible but could be claimed as claims against the estateb. Judicial expense incurred within 6 months from the date of the death is allowed as deduction from the gross estatec. Claims against the estate are unpaid lawful obligations by the decedent which should be paid by the heir if the value of the estate is inadequated. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing15. Which of the following statements is/are true?a. No deduction is allowed on the property which is not included in the decedents gross estateb. Expenses primarily incurred by an heir intended to establish his interest in the estate are deductible judicial expenses from the gross estate.c. A vanishing deduction is allowed for property received from donation if it is part of the gross estate.d. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing16. The following ordinary deductions from the gross estate actually reduce the value of the estate, excepta. Vanishing Deductionb. Funeral Expensesc. Judicial Expensesd. Transfer for Public Use17. Which of the following statements is/are false?a. Where there is reciprocity, the intangible personal property in the Philippines of a resident alien will be exempt from estate taxb. The shares of stock issued by a foreign corporation are intangible personal property within if these shares have acquired a business situs in the Philippinesc. Couples who got married on August 3, 1988 are governed by the Absolute Community regime in the absence of any pre-nuptial agreement to the contrary.d. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing18. HUSBAND recently died and is survived by WIFE and A (child of H and W) and B (legitimate child of W from a former marriage. Which of the following properties shall form part of the gross estate of HUSBAND under the Conjugal Property regime?a. Vehicle donated to WIFE by her grandfather when she was already married to HUSBANDb. Agricultural land inherited by WIFE from previous husbandc. Fruits or income derived from the agricultural land referred to in letter (b)d. None of the foregoing19. Assume the same facts in no. 18, except that the property relations of the spouses is governed by the Absolute Community regime. Which of the following properties shall form part of the gross estate of HUSBAND?a. Vehicle donated to WIFE by her grandfather when she was already married to HUSBANDb. Agricultural land inherited by WIFE from previous husbandc. Fruits or income derived from the agricultural land referred to in letter (b)d. None of the foregoing20. Which of the following properties constitutes the common property of the spouses H and W under the Conjugal regime?a. Land inherited by H during marriageb. Fruits of land in letter (a)c. Jewelry inherited by W during marriaged. Building donated to W before marriage21. - Taxation of the estate shall be governed by the stature or law in force at the time of distribution of the estate to the heirs. Succession takes place upon determination of the respective share of the heirs in the estate of the decedenta. True, Trueb. True, Falsec. False, Trued. False, False22. Which of the following statements is correct?a. The power of taxation reaches even the citizens abroad and their income earned from sources outside the Philippinesb. Priests and religious institutions are exempt from income and property taxesc. Separation benefits received by terminated employees resulting from a deadlock in their collective bargaining agreement are exempt from income taxd. The value of the property received as a gift, or under a will or testament or through legal succession is exempt from taxation

III. DONORS TAX23. For donors tax purposes, who among the following is/are stranger(s) to youa. The grandson of the daughter of your grandsonb. The grandfather of the mother of your grandmotherc. The brother of the father of your grandfatherd. The grandson of the sister of your mothera. I and IIb. III and IVc. III onlyd. IV only24. A. The gift is perfected from the moment the donor effects the delivery either actually or constructively of the donated propertyB. Donors tax is a property tax imposed on the property transferred by way of gift inter vivosa. True, Trueb. True, Falsec. False, Trued. False, False25. The donation of a movable property may be made.a. Orallyb. In Writingc. Either A or Bd. Neither A nor B26. The donation of an immovable property shall be madea. In Writingb. In a public instrumentc. Either A or Bd. Neither A nor B27. Using the preceding number, acceptance by the done may be madea. In the same deed of donationb. In a separate documentc. Either A or Bd. Neither A nor B28. Determine which of the following gifts given by a parent to his child is entitled to the Php 10,000 exemption?a. Gift given on account of the childs 18th birthdayb. Gift given on account of the childs college graduationc. Gift given on account of the childs successful recovery from cancerd. None of the foregoing29. Determine which of the following exempt gifts shall be included as part of the gross gifts in the donors tax return:a. Gift given on account of a childs marriageb. Gift given to the governmentc. Gift given to educational, religious, cultural, or social welfare institutionsd. All of the foregoing30. X is a Chinese national who is residing in China. He donated his Philippine shares of stock to his Chinese friend, Y, who is residing in the Philippines. Assume Chinese tax law imposes gift tax on real and personal properties donated by Chinese citizens, whether located in China or elsewhere, but does not allow any tax credit for gift taxes paid in foreign countries. X paid gift taxes to both Chinese and Philippine governments. Which of the following statements is correct?a. X may claim a tax credit for China gift tax because he also paid Philippine Donors taxb. X may claim a tax credit for the China gift tax because of the burdensome effect of international double taxation on the same propertyc. X cannot claim a tax credit for the China gift tax because of the absence of reciprocityd. X cannot claim a tax credit for the China gift tax because a nonresident alien is not allowed to claim a tax credit for foreign gift taxes under Philippine tax laws31. The donors tax return, as well as the donors tax due thereon, shall be filed and paid not later than:a. 1 month from the date of the giftb. 30 days from the date of the giftc. 3 months from the date of the giftd. 90 days from the date of the gift

32. A. As a rule, donation between husband and wife during the marriage is voidB. Donation can be made to conceived or unborn children.a. True, Trueb. True, Falsec. False, Trued. False, False33. A gift that is given to one of the following donees shall be subject to the 30% gift tax rate:a. Grandchildb. Auntc. Sister-in-lawd. Brother34. A gift given to one of the following donees shall be subject to the graduated donors tax rates:a. Naturally adopted childb. Adulterous childc. Sister-in-lawd. Child of the 1st cousin35. Which of the following transactions is deemed a taxable gift?a. Condonation or remission of a debtb. Sale of a residential house and lot for less than an adequate and full consideration in money or moneys worthc. Both (a) and (b)d. Neither (a) nor (b)

IV. BUSINESS TAXESIdentification: Identify the type of business taxes the following transactions are subject to. Choose from the following items:CHOICES:a.) Subject to 0% VATb.) Subject to 12% VATc.) Exempt from VAT but Subject to OPTd.) Exempt from VAT and not subject to OPTe.) Exempt from Business Tax

36. Sale or importation in their original state of agricultural and marine food products.37. Importation by agricultural cooperatives duly registered with CDA of machinery and farm inputs used in their production.38. Importation of personal and household effects belonging to residents of the Philippines returning from abroad.39. Receipts of educational institutions relating to educational activities.40. A person whose sales do not exceed Php 1,919,50041. Gross receipt of common carriers by land transport of passengers.42. Gross receipt of common carriers by land transport of cargoes and goods, gross receipts exceeding Php 1,919,500.43. Establishments whose gross sales or receipts do not exceed Php 100,000 during any 12-month period.44. Business whose annual gross receipts or sales exceeds Php 1,919,500 and who are not VAT registered.45. Establishments whose annual gross sales do not exceed Php 1,919,500 and who are not VAT registered.46. Hospital, medical and dental services, except those rendered by professionals.47. Receipts by educational institutions under DepEd, CHED, and TESDA on educational activities.48. Service rendered by professionals, such as doctors who are not VAT registed and whose gross sale did not exceed Php 1,919,500.49. A person whose sales do not exceed Php 100,000.50. Operators of nightclubs and day clubs.51. Services of lawyers duly registered with the IBP whose gross receipts exceed Php 1,919,500.52. Services of doctors duly registered with the PRC whose gross receipts exceed Php 1,919,500.53. Services of lawyers duly registered with the IBP whose gross receipts do not exceed Php 1,919,500 and are VAT registered.54. Services of doctors duly registered with the PRC whose gross receipts do not exceed Php 1,919,500 and are VAT registered.55. Services of accountants duly registered with the PRC whose gross receipts do not exceed Php 1,919,500 and are VAT registered.56. Services of engineers duly registered with the PRC whose gross receipts do not exceed Php 1,919,500 and are VAT registered.57. Services of accountants duly registered with the PRC whose gross receipts Php 1,919,500.58. Services of engineers duly registered with the PRC whose gross receipts Php 1,919,500.59. Services of doctors duly registered with the PRC employed by San Miguel Corporation.60. Services of accountants duly registered with the PRC employed with the Commission on Audit.

V. VALUE ADDED TAX

61. Where the input tax exceed the ouput tax at the end of any quarter, the excess may be claimed as a:a. Tax refund in the succeeding quarter or quartersb. Tax credit in the succeeding quarter or quartersc. Either (a) or (b)d. Neither (a) nor (b)62. The input tax on the purchase or lease of goods, properties or services related to a zero-rated transaction may be claimed as a:a. Tax refundb. Tax creditc. Either (a) or (b)d. Neither (a) nor (b)63. The prescribed period for the Commissioner of Internal Revenue (CIR) to act or decide on the application for tax credit on input tax is:a. 180 days from submission of taxpayers supporting documentsb. 120 days from submission of taxpayers supporting documentsc. 90 days from submission of taxpayers supporting documentsd. 60 days from submission of taxpayers supporting documents64. A taxpayer whose application for tax credit on input tax has been denied by the Commissioner of Internal Revenue may file a Petition for Review before the:a. Court of Tax Appeals in Divisionb. Court of Tax Appeals en bancc. Court of Appealsd. Regional Trial Court65. What institution is required to deduct and withhold a final VAT of 5% on the purchase of goods or services subject to VAT?a. National Government or any political subdivisionb. Government-owned or controlled corporationsc. Both (a) and (b)d. Neither (a) nor (b)66. Which of the following statements is/are true?a. The VAT shall be withheld where the purchases is a GOCCb. The VAT return shall be filed and the payment thereof shall be made within 25 days following the close of each taxable quarter.c. The VAT invoice or receipt shall indicate the purchasers name, business style, address and taxpayers identification number where the sale amounts to Php 1,000 or mored. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing67. Which of the following statements is/are false?a. Output Tax minus Input Tax equals the VAT payableb. Any excess of the input tax over the output tax may be claimed as refundc. Any input tax that is attributable to zero-rated sales by VAT registered person may be claimed as a tax credit from other internal revenue taxes.d. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing68. Which of the following statements is/are false?a. Transitional Input VAT of 2% of the beginning inventory of each year is allowed as tax credit.b. The presumptive input VAT is 4% of all purchases of goods.c. The creditable input VAT is increased by transitional input VAT and presumptive input VAT.d. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing69. Which of the following statements is/are true?a. The value of goods subjected to VAT can still be subjected to the same tax.b. The nonresident foreign entity is required to file or declare a VAT return.c. Transitional input VAT allows deduction of a higher amount of actual input VATd. A and Be. B and Cf. A and Cg. All of the foregoingh. None of the foregoing70. The presumptive input VAT is not allowed on the primary raw materials used in the production ofa. Cooking Oilb. Salt, soy, and sugarc. Sardines and mackereld. Milk and packed instant noodle

PROBLEMNormana, a Filipino Citizen, was married to Jill. On their wedding anniversary on 31 December 2010, Normana wanted to surprise her husband by bringing home an expensive ice cream cake and a brand new Rolex watch. From work, Normana immediately went home and strode straight into the bedroom to surprise her husband. But Normana was the one surprised when she opened the bedroom door. There, Normana saw their bedroom covered by lavender-scented candles and rose petals scattered on the floor. On the bed, there she saw her husband Jill, seemingly all tied up on bed wearing his sexiest briefs and a large ID tag which says Happy Anniversary Darling. Because of her extreme surprise for what she saw, Normanas blood pressure shot up and she fell on the ground unconscious. Since Jill was all tied up, he wasnt able to do anything to his fallen spouse. Jill then screamed as loud as he can to get help. All the neighbors then rushed into the house and was able to help Normana and sent her to the hospital for treatment. Jill, on the other hand realized that her neighbors saw him all tied in bed in his sexy briefs with all the candles and rose petals. Jill suffered a heart attack because of unbearable shame. Jill died a day after their wedding anniversary or on 1 January 2011.

Jill left the following properties:1. Properties inherited from Jills father who died on 20 January 2009:a. Agricultural land - Php2,000,000

The agricultural land had a FMV of P1,600,000 at the time of Jills inheritance. The agricultural land was originally acquired by Jills father for P1,300,000. The estate tax was duly paid. The agricultural was previously subjected to a mortgage of P600,000 at the time of its acquisition. Jill was able to pay P400,000 before he died.

2. Properties inherited from Jills mother who died sometime on 2000, one week after his marriage to Normana:a. Fish pond Php 2,000,000b. Commercial building Php 2,000,000

3. Properties acquired through Jills labor:a. Residential home (family home) Php 1,000,000b. Commercial land and building Php 5,000,000c. Motor vehicles- Php 1,500,000d. Others Php 500,000

Jills estate claimed the following deductions:1. Funeral Expenses - Php250,0002. Judicial Expenses- Php 120,0003. Claims against insolvents (included in others) Php 180,0004. Medical Expenses for Jills hospitalization Php 300,000

TRUE OR FALSE Write the word TRUE if the statement is true. Write the word FALSE if the statement is false.

71. The total gross estate is P14,000,000.72. The total funeral expenses is P200,000.73. The total vanishing deduction is P756,000.74. The total ordinary deduction is P1,456,00075. The total estate after ordinary deduction is P4,792,000.76. The total conjugal estate after ordinary deduction is P7,500,000.77. The deductible family home is P1,000,000.78. The share of the surviving spouse is P3,750,000.79. The net estate is P6,742,000.80. The estate tax is P712,800.

There are no secrets to success. It is the result of preparation, hard work, and learning from failure.~~~Colin Powell

FIN