Chapter 9

Question 1

What is the purpose of tax credit for foreign estate tax?
a) To increase tax liability
b) To allow deduction from net taxable estate
c) To avoid double taxation
d) To exempt estate from taxation

Answer 1

c) To avoid double taxation

Question 2

Which of the following estates is NOT entitled to a tax credit?
a) Resident citizen
b) Non-resident citizen
c) Resident alien
d) Non-resident alien

Answer 2

d) Non-resident alien

Question 3

In the tax code, a tax credit is deducted from:
a) Gross estate
b) Net taxable estate
c) Philippine estate tax itself
d) Taxable income

Answer 3

c) Philippine estate tax itself

Question 4

The tax credit for foreign estate tax is limited to:
a) The amount of tax paid to the foreign country
b) The proportion of the tax based on the decedent’s estate within that country
c) The total estate tax due in the Philippines
d) The entire estate of the decedent

Answer 4

b) The proportion of the tax based on the decedent’s estate within that country

Question 5

If a decedent had estates in the Philippines and China, the tax credit is computed based on:
a) Net estate in China divided by the entire net estate, multiplied by the Philippine estate tax
b) Philippine estate tax multiplied by 10%
c) Estate tax paid in China plus the Philippine estate tax
d) The full amount of estate tax paid in China

Answer 5

a) Net estate in China divided by the entire net estate, multiplied by the Philippine estate tax

Question 6

If estate tax is paid to two or more foreign countries, the allowable tax credit is the lower of:
a) Total foreign taxes paid or the tax credit limit
b) Total estate tax due or the total net estate
c) The sum of all foreign estate taxes paid
d) The full Philippine estate tax due

Answer 6

a) Total foreign taxes paid or the tax credit limit

Question 7

If a non-resident alien has an estate in the Philippines and a foreign country, will they be allowed a tax credit?
a) Yes
b) No

Answer 7

b) No

Question 8

Estate tax credit cannot include which of the following?
a) Surcharges
b) Penalties
c) Interest
d) All of the above

Answer 8

d) All of the above

Question 9

The tax credit formula for estate tax paid to a foreign country involves multiplying the Philippine estate tax by:
a) The percentage of the foreign net estate to the entire net estate
b) The tax rate in the foreign country
c) The estate tax payable in the foreign country
d) The Philippine net estate
a) The percentage of the foreign net estate to the entire net estate

Answer 9

a) The percentage of the foreign net estate to the entire net estate

Question 10

The Philippine estate tax rate applied in the examples is:
a) 4%
b) 5%
c) 6%
d) 7%

Answer 10

c) 6%

Question 11

What is the main reason for granting tax credits for foreign estate taxes?
a) To encourage investments abroad
b) To prevent international double taxation
c) To increase government revenue
d) To simplify estate tax computation

Answer 11

b) To prevent international double taxation

Question 12

What is the basis for computing the allowable tax credit for a foreign estate tax?
a) The total estate value worldwide
b) The proportion of the foreign estate to the total net estate
c) The estate tax rate in the foreign country
d) The highest estate tax paid

Answer 12

b) The proportion of the foreign estate to the total net estate

Question 13

If estate tax is paid to two or more countries, how is the tax credit determined?
a) The total tax paid to all countries
b) The lower amount between computed tax credit and total foreign estate tax paid
c) The Philippine estate tax multiplied by the foreign estate’s value
d) A fixed percentage of the Philippine estate tax

Answer 13

b) The lower amount between computed tax credit and total foreign estate tax paid

Question 14

If the total net estate is P11,000,000, and the estate tax rate is 6%, what is the total estate tax due in the Philippines?
a) P660,000
b) P540,000
c) P420,000
d) P295,000

Answer 14

a) P660,000

Question 15

If the estate tax paid in Malaysia is P130,000, but the computed tax credit is only P120,000, how much tax credit is allowed?
a) P130,000
b) P120,000
c) P110,000
d) P100,000

Answer 15

b) P120,000

Question 16

Enumerate the three types of estates entitled to a tax credit.

Answer 16

1. Resident citizens
2. Non-resident citizens
3. Resident aliens

Question 17

What is the tax credit deducted from?

Answer 17

Philippine estate tax

Question 18

What do we call the reduction from gross estate instead of tax credit?

Answer 18

Tax deduction

Question 19

What formula is used to compute the tax credit for a single foreign country?

Answer 19

(Net Estate in Foreign Country / Entire Net Estate) × Philippine Estate Tax

Question 20

What is the estate tax rate applied in the given computations?

Answer 20

6%

Question 22

If an estate is subject to taxation in both the Philippines and a foreign country, what tax credit can be claimed?

Answer 22

Foreign estate tax credit

Question 23

If a decedent had P7,000,000 in the Philippines and P2,000,000 in China, what proportion of estate tax is attributed to China?

Answer 23

2M / 9M or approximately 22.22%

Question 24

What is the amount of tax paid to a foreign country in the example with China?

Answer 24

P150,000

Question 25

If a decedent is a non-resident alien, how much tax credit can they claim?

Answer 25

None

Question 26

What is the final Philippine estate tax due if the computed estate tax is P540,000 and the allowable tax credit is P120,000?

Answer 26

P420,000

Question 27

If a decedent has estates in the Philippines, Singapore, and Malaysia, how many different tax credits need to be computed?

Answer 27

Two (one for Singapore and one for Malaysia)

Question 29

What is the formula used when estate tax is paid to two or more foreign countries?

Answer 29

(Total Foreign Net Estate / Entire Net Estate) × Philippine Estate Tax

Question 30

What happens if the actual foreign estate tax paid is lower than the computed tax credit?

Answer 30

The lower amount (actual tax paid) is used as the tax credit.

Question 31

If an estate is valued at P6,000,000 in the Philippines and P3,000,000 in Singapore, what fraction of the estate is in Singapore?

Answer 31

3M / 11M or approximately 27.27%

Question 32

What is the final estate tax due in the Philippines if the computed estate tax is P660,000 and the allowed foreign tax credit is P285,000?

Answer 32

P375,000

Question 33

What is the primary factor that determines the maximum allowable tax credit?

Answer 33

The proportion of the foreign estate to the entire net estate

Question 34

Spouses A and B leased a piece of land belonging to B's parents for 25 years. The spouses built their house on it worth P3,000,000. Subsequently, in a case that C filed against A and B, the court found the latter liable to C for P2,000,000. When the sheriff was attaching their house for the satisfaction of the judgment, A and B claimed that it was exempt from execution, being a family home. Is this claim correct? a Yes, because while B's parents own the land, they agreed to have their daughter build her family home on it. b. No, because there is no judicial declaration that it is a family home. c. No, since the land does not belong to A and B, it cannot qualify as a family home. d. Yes, because the A and B's family actually lives in that house.

Answer 34

c. No, since the land does not belong to A and B, it cannot qualify as a family home.

Question 35

The decedent died intestate leaving an estate of P10 million. He left the following heirs a) Marlon, a legitimate child and b) Cecilia, the legal spouse. Divide the estate. a. Marlon gets 1/4 and Cecilia gets 3/4. b. Marlon gets 2/3 and Cecilia 1/3. c. Marlon gets 1/2 and Cecilia gets 1/2. d. Marlon gets 3/4 and Cecilia 1/4.

Answer 35

b. Marlon gets 2/3 and Cecilia 1/3.

Question 36

X and Y, both Filipinos, were married and resided in Spain although they intend to return to the Philippines at some future time. They have not executed any marriage settlements. What law governs their property relations? a. They may choose between Spanish law and Philippine law. b. Philippine law since they are both Filipinos. c. No regime of property relations will apply to them. d. Spanish law since they live in Spain.

Answer 36

b. Philippine law since they are both Filipinos.

Question 37

Birth determines personality. Death extinguishes it. Under what circumstances may the personality of a deceased person continue to exist? a. In case of re-appearance of a missing person presumed dead. b. In protecting the works of a deceased under intellectual property laws. c. In case of declaration of presumptive death of a missing spouse. d. In the settlement of the estate of a deceased person.

Answer 37

d. In the settlement of the estate of a deceased person.

Question 38

What happens to the property regimes that were subsisting under the New Civil Code when the Family Code took effect? a. The original property regimes are immutable and remain effective b. Those enjoying specific regimes under the New Civil Code may adopt the regime of absolute community of property under the Family Code. c. These that married under the New Civil Code but did not choose any of its regimes shall now be governed by the regime of absolute community of property d. They are superseded by the Family Code which has retroactive effect.

Answer 38

c. These that married under the New Civil Code but did not choose any of its regimes shall now be governed by the regime of absolute community of property

Question 39

The testator executed a will following the formalities required by the law on succession without designating any heir. The only testamentary disposition in the will is the recognition of the testator's illegitimate child with a popular actress, is the will valid? a. Yes, since in recognizing his illegitimate child, the testator has made him his heir b. No, because the non-designation of heirs defeats the purpose of a will. c. No, the will comes to life only when the proper heirs are instituted d. Yes, the recognition of an illegitimate heir is an ample reason for a will.

Answer 39

a. Yes, since in recognizing his illegitimate child, the testator has made him his heir

Question 40

In the order of intestate succession where the decedent is legitimate, who is the last intestate heirs or heir who will inherit if all heirs in the higher level are disqualified or unable to inherit? a. Nephews and nieces. b. Brothers and sisters. c. State d. Other collateral relatives up to the 5th degree of consanguinity.

Answer 40

c. State

Question 41

Joanne married James, a person with no known relatives. Through James' hard work, he and his wife Joanne prospered. When James died, his estate alone amounted to P100 million. If, in his will, James designates Joanne as his only heir, what will be the free portion of his estate. a. Joanne gets all; estate has no free portion left. b. Joanne gets 1/2; the other half is free portion. c. Joanne gets 1/3; the remaining 2/3 is free portion. d. Joanne gets 1/4; the remaining 3/4 is free portion.

Answer 41

a. Joanne gets all; estate has no free portion left.

Question 42

When does the regime of conjugal partnership of gains begin to exist? a. At the moment the parties take and declare each other as husband and wife before officiating officer. b. At the time the spouses acquire properties through joint efforts. c. On the date the future spouses executed their marriage settlements because this is the starting point of their marital relationship. d. On the date agreed upon by the future spouses in their marriage settlements since their agreement is the law between them.

Answer 42

a. At the moment the parties take and declare each other as husband and wife before officiating officer.

Question 43

Before Karen married Karl, she inherited P5 million from her deceased mother which amount she brought into the marriage. She later used part of the money to buy a new Mercedes Benz in her name, which Karen and her husband used as a family car, is the car a conjugal or Karen's exclusive property? a. It is conjugal property since the spouses use it as a family car. b. it is Karen's exclusive property since it is in her name. c. it is conjugal property having been bought during the marriage. d. It is Karen's exclusive property since she bought it with her own money.

Answer 43

d. It is Karen's exclusive property since she bought it with her own money.

Question 44

Tong Siok, a Chinese billionaire and a Canadian resident, died and left assets in China valued at P80 billion and in the Philippines assets valued at P20 billion. For Philippine estate tax purposes the allowable deductions for losses, indebtedness, and taxes, property previously taxed, transfers for public use, and the share of his surviving spouse in their conjugal partnership amounted to P15 billion. Tong's gross estate for Philippine estate tax purposes is a. P20 billion b. PS billion C P100 billion. d. P85 billion.

Answer 44

a. P20 billion

Question 45

Which among the following reduces the gross estate (not the net estate) of a citizen of the Philippines for purposes of estate taxation? a. Transfers for public use b. Property previously taxed c. Standard deduction of P5 million d. Capital of the surviving spouse

Answer 45

d. Capital of the surviving spouse

Question 46

Don Fortunato, a widower, died in May 2021. 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? a. Don Epitacio since the tax became due prior to his resignation. b. The eldest child who would be reimbursed by the others. c. All the four children, the tax to be divided equally among them. d. The person designated by the will as the one liable.

Answer 46

c. All the four children, the tax to be divided equally among them.

Question 47

Gerardo died on July 31, 2021. His estate tax return should be filed within a. six months from filing of the notice of death. b. sixty days from the appointment of an administrator. c. six months from the time he died on July 31, 2021. d. sixty days from the time he died on July 31, 2021.

Answer 47

c. six months from the time he died on July 31, 2021.