CHAPTER 4 MULTIPLE CHOICE Flashcards
Choose the letter of the correct answer.
It arises when two or more heirs or beneficiaries inherit an undivided property from a decedent, or when a donor makes a gift of an undivided property in favor of two or more donees
a. Partnership
b. Trust
c. Joint account
d. Co-ownership
D. CO-OWNERSHIP
Which of the following shall qualify as co-ownership?
I. Succession by several heirs to an undivided estate, the estate is not under administration;
II. Donation of property to two or more beneficiaries.
a. Both I and II
b. Neither I nor II
c. I only
d. Il only
A. BOTH I AND II
Question 1: Is a co-ownership taxable?
Question 2: Is the share of co-owner taxable?
Answer to Question 1: No, because the activities of the co-owners are limited to the preservation of the property and the collection of income therefrom.
Answer to Question 2: Yes, because each co-owner is taxed individually on their distributive share in the income of the co- ownership.
a. Answers to both questions are correct.
b. Only the answer for Question 1 is wrong.
c. Only the answer for Question 2 is wrong.
d. Answers to both questions are wrong.
C. ONLY THE ANSWER FOR QUESTION 2 IS WRONG
Statement 1: Co-owners are taxed individually on their distributive share in the income of the co-ownership.
Statement 2: If co-owners invest the income in a co-ownership in business for profit, they would constitute themselves into a partnership and as such shall be taxable as corporation.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
B. STATEMENT 1 IS TRUE BUT STATEMENT 2 IS FALSE
When will an inherited property be considered as owned by an unregistered partnership?
I. When the property remained undivided for more than ten (10) years.
II. When no attempt was ever made to divide the same among the co-heirs, nor was the property under administration proceedings nor held in trust
a. Only condition I is required.
b. Only condition II is required
c. Conditions I and II are required
d. None of the above
C. CONDITIONS I AND II ARE REQUIRED
It composed of all the property, rights, and obligations of a deceased person which are not extinguished by his death, including those which have accrued thereto since the opening of succession.
a. Estate
b. Devisee
c. Legatee
d. Testator
A. ESTATE
Income received by the estate during the period of administration or settlement of the estate, for tax purposes is known as
a. Income of the estate
b. Income of the heirs
c. Income of the trustee
d. Income of the testator
A. INCOME OF THE ESTATE
Statement 1: For taxation purposes, the taxable income of the estate shall be determined in the same manner and basis as in the case of individual taxpayers.
Statement 2: Income of the estate distributed to a beneficiary is allowable deduction from the gross income of the estate.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
D. STATEMENTS 1 AND 2 ARE TRUE
The following statements refer to the rules in determining the taxable income and the applicable income tax liability of an estate. Which of the statements is correct?
I. The items of gross income of the estate are the same items as the items of gross income of individual taxpayers.
II. Deductions from the gross income of the estate are the same as the items of deductions allowed to an individual taxpayer.
III. In addition to the allowable deductions under Section 34 of the Tax Code, the estate is allowed to deduct the amount of income of the estate during the taxable year that is paid or credited to the legatee, heir or beneficiary.
IV. The amount of income of the estate during the year that is paid or credited to the legatee, heir or beneficiary is subject to final withholding tax of 15%.
a. I and II only
b. I, II and III only
c. I, II, III and IV
d. None of the above
B. I, II, AND III ONLY
Which of the following is included in the income of the estate of a decedent?
a. Income received by the estate of a deceased person during the period of administration or settlement of the estate.
b. Excess of selling price over the appraised value placed upon property at the time of death, where the property was sold after the settlement of the estate.
c. Appreciation in the value of property passed to the executor or administrator upon death of decedent.
d. Delivery of property in kind to legatee or devisee.
A. INCOME RECEIVED BY THE ESTATE OF A DECEASED PERSON DURING THE PERIOD OF ADMINISTRATION OR SETTLEMENT OF THE ESTATE
Statement 1: Where the estate is under judicial administration, the income of the estate shall be taxable to the fiduciary or trustee.
Statement 2: Where the estate is not under judicial administration, the income of the estate shall be taxable to the heirs and beneficiaries.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
B. STATEMENT 1 IS TRUE BUT STATEMENT 2 IS FALSE
- When an individual taxpayer dies, future income on his property will be taxed to
a. Those who inherit the property after they receive the property.
b. The estate itself, after the heirs have received the property.
C. The individual himself.
d. None of the above.
A. THOSE WHO INHERIT THE PROPERTY AFTER THEY RECEIVE THE PROPERTY
Statement 1: The amount of income of the estate for the taxable which is properly paid or credited during such year to any legatee, heir, or beneficiary, is a special item of deduction from the gross income of the estate.
Statement 2: An allowance paid to a widow or heir out of the corpus of the estate, is not deductible from the gross income of the estate.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
B. STATEMENT 1 IS TRUE BUT STATEMENT 2 IS FALSE
Statement 1: When an estate, under administration, has income- producing properties, the annual income of the estate becomes part of the taxable gross estate.
Statement 2: When an estate, under administration, has income- producing properties and its income during the year is distributed to the heirs, the income so distributed is taxable to the heirs as part of their gross income for the year.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
C. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
D. STATEMENTS 1 AND 2 ARE TRUE
Statement 1: The income of the estate distributed to the beneficiary during the year is subject to final withholding tax of 15%.
Statement 2: The withholding tax on the income distributed to the beneficiary is creditable against the total tax liability of the beneficiary.
a. Statements 1 and 2 are false
b. Statement 1 is true but statement 2 is false
c. Statement 1 is false but statement 2 is true
d. Statements 1 and 2 are true
D. STATEMENTS 1 AND 2 ARE TRUE
