Philippine bar exam questions 2008 (Taxation Q6)

While driving his car to Baguio last month, Pedro Asuncion, together with his wife Assunta, and only son, Jaime, met an accident that caused the instantaneous death of Jaime. The following day, Assunta also died in the hospital. The spouses and their son had the following assets and liabilities at the time of death: .............................Assunta......................................................Jaime .............................Exclusive................Conjugal.......................Exclusive ...........................______________________________________________ Cash..................................................P10,000,000...............P1,200,000. Cars......................P2,000,000...................500,000. Land........................5,000,000................2,000,000. Residential house....................................4,000,000. Mortgage payable....................................2,500,000. Funeral expenses.......................................300,000.

a) Is the Estate of Jaime Asuncion liable for estate tax? Explain. (4%)

b) Is vanishing deduction applicable to the Estate of AssuntaAsuncion? Explain. (4%)