Taxation Straight Problem No. 11 (Goo Hye Sun and Ahn Jae Hyun)

Dahil malapit na rin ang October 2018 CPA Board Exam, may mga ginawa nang problems ang may-akda. Take time to analyze these. Malaking tulong ito para sa inyo, lalo na’t more on situational questions na ang board exam.

This time, we will touch again on another topic related to Estate Taxation. Solve this problem:


Goo Hye Sun is seeking payment from her estranged husband, Ahn Jae Hyun. As the latter filed for divorce, she requested the house as payment for most of expenses she incurred during marriage.

According to Koreaboo:

This house in question is one of the largest suites in an apartment complex in Geumho-dong, Seoul where Ahn Jae Hyun already lived prior to the wedding. It is known to have been purchased in 2016, at 700 million KRW [PHP 16 million] in full cash, by Ahn Jae Hyun.

Assume that the apartment was rented out for one year at PHP 160,000 a month, after they married.

Jae Hyun is now seeking clarifications from you if Goo Hye Sun’s statement holds true.

Use Peso amounts in solving this problem.

Discussion Questions:

  1. Classify the apartment, and apportion amounts according to property regime. Use this table:
Property Regime Conjugal Partnership of Gains Absolute Community of Property
AHN JAE HYUN
Exclusive
·         Apartment
·         Rent Income
GOO HYE SUN
Exclusive
·         Apartment
·         Rent Income
 
Conjugal
·         Apartment
·         Rent Income

Solution: 

Property Regime Conjugal Partnership of Gains Absolute Community of Property
     
AHN JAE HYUN    
Exclusive    
·         Apartment 16,000,000.00
·         Rent Income
     
GOO HYE SUN    
Exclusive    
·         Apartment
·         Rent Income
     
Conjugal    
·         Apartment 16,000,000.00
·         Rent Income 80,000.00 80,000.00
  1. Using the assumption, determine the Real Property Tax to be paid by Ahn Jae Hyun. According also to said article, the fair market value is about 1.5 billion KRW (PHP 34.48 million). Assume also that Assessment Level = 20% and that 1% of total assessed value is levied as RPT.

Computation: PHP 34.48 million x 20% x 1% = PHP 68,960.00

  1. Compute for the output tax to be paid by Ahn Jae Hyun on rental of his house.

None. Even if monthly rent exceeds PHP 15,000.00 monthly rental limit required for VAT exemption, taken yearly it does not exceed PHP 3 million annual threshold required for VAT imposition. Computation: PHP 160,000.00/month x 12 months = PHP 1,920,000.00.

Solutions are indicated in white text. Only select it after answering these questions.


Taxation problem created by: TweetNewscaster. Featured Image Credit from Koreaboo.

Taxation Straight Problem No. 6: Goblin

ALAM naman natin na itinadhana si Erin bilang Goblin’s bride. Ang kanyang task ay hugutin ang espada na nakabaon sa katawan ni Kim Shin, dahil siya lamang ang nakakakita sa bagay na iyan. Kapag binunot ni Erin ang espada, magiging abo ang Goblin at makakapag-resume ng normal na buhay si Erin.

Pero kung hindi niya binunot ang espada, gaya ng sabi ng isang espiritu na nagpakita kay Kim Shin, darating ang kapahamakan kay Erin – na mas marami at mas malala.

Ngayon, i-assume natin na binunot na nga ni Erin ang espada. Ano ang susunod? May maiiwang mga ari-arian si Kim Shin, at nilapitan ka ni Erin dahil hindi niya alam kung ano ang tax na applicable sa sitwasyong ito. At ano ang gagawin mo? Solve this very comprehensive problem:


The estate of Mr. Kim Shin had provided you with the following information with the help of his executor, Mr. Grim Reaper:

  1. Shares of stocks in GMA Network, traded in the local stock exchange. He holds 1,000 shares and as of today, the market value of the stocks is P6.54 per share.
  2. Shares of stocks in TV5, not traded in LSE amounting to 2,500 shares. Book value and par value of these shares are P5.28 and P3.16, respectively.
  3. House and lot in Calamba City which serves as his family home. He had purchased this at an amount of P900,000.
  4. Proceeds of life insurance amounting to P500,000. Ms. Erin, his wife, is designated as the beneficiary of the said proceeds.
  5. Franchise issued in the United States but was exercised in the Philippines, P750,000.
  6. Savings account with Any Bank, exclusively owned by Mr. Kim Shin, P1,347,000.
  7. Current account with Coin Bank, a bank located in Texas, P442,000.
  8. Shares of stocks in Disneyland, Hong Kong, actual value P561,000.
  9. Jewelry consisting of diamond ring he bought during an official trip, P3,000.
  10. Other exclusive personal properties, P28,000.
  11. Brand new Ferrari registered in Las Vegas, P1,080,000.
  12. Vintage motorcycle located at Beijing, P157,000.
  13. House and lot in Trece Martires, Cavite, acquired during marriage, P374,000.
  14. Ancestral house in Bulacan, given by his mother as a gift after she died on September 11, 2001, P648,000
  15. A tract of land which in Mr. Kim Shin’s will shall be donated to the Municipal Government of Sta. Cruz, Laguna, P432,000.

These deductions have been claimed by the estate:

  1. Expenses incurred due to stabbing, which punctured his internal organs. Other expenses were for treatments due to his heart attack. Total was P354,000.
  2. Funeral expenses, P190,000. Additional and necessary expenses amounting to P5,000 were incurred after interment.
  3. Expenses for settlement of the estate, P475,000.
  4. Erin has expressed her assent on land transfer to the LGU of Sta. Cruz, Laguna.
  5. The house in Trece Martires had been damaged by fire three months after Mr. Kim Shin’s death. Assessed damage was P174,000, and insurance claimed totaled P50,000.
  6. Claims against the estate were worth P65,000, not notarized.

Actual payments of estate tax in other countries are as follows:

  1. United States: P187,580
  2. China: P32,440
  3. India: P2,500

Additional information:

  1. His debtor resides in New York, Quezon City and his another debtor lives in India. The two debtors are solidarily liable to him for the total amount of P500,000.
  2. He shares with his wife with regards to the house in Calamba, while the lot is his exclusive property. Reliable sources pegged the respective fair values of house and lot at P1.2 million and P1.8 million.
  3. For purposes of computing the limit on deductible ELIT for non-resident aliens, world gross estate is P5,375,000 and P7,741,740 for NRA with and without reciprocity, respectively
  4. Respective net estate for foreign countries: United States, P761,000; China, P359,000; India, P125,000.

Mr. Grim Reaper wants to know how much would the estate pay for its estate tax due.

For respective scenarios (non-resident citizen, non-resident alien with reciprocity, and NRA with reciprocity), compute for the following:

  1. Estate tax due
  2. Tax credit
  3. Estate tax still due
  4. Share of surviving spouse

Taxation Problem prepared by: TweetNewscaster


Featured Image Credit: Goblin image