GUIDELINES ON ESTATE AND DONOR'S TAX Atty. Edwin R.

Abella

Concept and Nature:

Estate tax is a tax on the ri ht o! the de"eased #erson to trans$it his estate to his law!%l heirs and bene!i"iaries. It is not a tax on #ro#erty. Estate tax is held to be an ex"ise tax i$#osed on the #ri&ile e o! trans$ittin #ro#erty %#on the death o! the owner. The estate tax is enerated by death and a""r%es at the ti$e o! death. It is o&erned by the law in !or"e at the ti$e o! death notwithstandin the #ost#one$ent o! the a"t%al #ossession or en'oy$ent o! the estate by the bene!i"iary.

Properties Includable In Gross Estate or Gross Gift:

1. Citizen or resident decedent or donor:
() Real or i$$o&able #ro#erty* where&er lo"ated. +) ,ersonal #ro#erty* tan ible or intan ible* where&er lo"ated.-,D(./0* 12((203)

2. Non-resident alien:
() Real or i$$o&able #ro#erty lo"ated in the ,hili##ines. +) Tan ible #ersonal #ro#erty lo"ated in the ,hili##ines. 4) Intan ible #ersonal #ro#erty with sit%s in the ,hili##ines s%b'e"t to the r%le o! re"i#ro"ity exe$#tion.

Properties Considered Situated in the Philippines:

() 5ran"hise whi"h $%st be exer"ised in the ,hili##ines.x +) Shares* obli ations or bonds iss%ed by "or#oration or so"iedad anoni$a or ani6ed or "onstit%ted in the ,hili##ines. 4) Shares* obli ations or bonds iss%ed by a !orei n "or#oration ei hty7 !i&e #er "ent%$ o! the b%siness o!* whi"h is lo"ated in the ,hili##ines. .) Shares* obli ations or bonds iss%ed by a !orei n "or#oration i! s%"h shares* obli ations or bonds ha&e a"8%ired a b%siness sit%s in the ,hili##ines. /) Shares or ri hts in any #artnershi#* b%siness or ind%stry established in the ,hili##ines.

Composition of the Gross Estate:

() +) 4) .) /) Real and #ersonal #ro#erty* whether tan ible or intan ible or $ixed. De"edent's interest in #ro#erty. ,ro"eeds o! li!e ins%ran"e. Taxable trans!ers. Trans!ers !or ins%!!i"ient "onsideration.

Proceeds of ife Insurance:

() In"l%dable in ross estate9 a. Re&o"able bene!i"iary. b. A##ointed bene!i"iary is the estate* exe"%tor or ad$inistrator. +) Not in"l%dable in ross estate9 Re"ei&ed !ro$ the GSIS and SSS.

!a"able !ransfers:
() Trans!er in "onte$#lation o! death -47year #res%$#tion re#ealed by ,D (0:/* 32(23:) +) Trans!er with retention or reser&ation o! "ertain ri hts.

4) Re&o"able trans!er. .) Trans!ers o! #ro#erty %nder eneral #ower o! a##oint$ent. a. Existen"e o! eneral #ower o! a##oint$ent held by the de"edent. b. Exer"ise o! s%"h #ower by the de"edent by will or by deed intended to ta;e e!!e"t %#on death. ". ,assin o! #ro#erty by &irt%e o! s%"h death. /) Trans!ers !or ins%!!i"ient "onsideration. a. <o&ers only the ex"ess o! the !air $ar;et &al%e o&er the &al%e o! the "onsideration. b. Trans!er was $ade in "onte$#lation o! death* otherwise will be s%b'e"t to donors's tax.

#inds of Propert$:
() =y Nat%re9 a. Real or i$$o&able #ro#erty. b. ,ersonal #ro#erty* tan ible or intan ible. +) =y Ownershi#9 a. Ex"l%si&e "a#ital or #ara#hernal #ro#erty. b. <on'% al or "o$$%nity #ro#erty.

%aluation of Gross Estate or Gift:

() >al%ation date 7 Ti$e o! death or i!t. +) =asis o! &al%ation9 a. Real #ro#erties -land) i. ,rior to A% %st 4(* (?1? 7 <o$$. A"t .11 ii. Se#te$ber (* (?1? to A% %st (4* (?0. 7R.A. 1(( iii. A% %st (.* (?0. to No&e$ber +.* (?01 7 ,D /4? i&. No&e$ber +/* (?01 to De"e$ber 4(* (?3/ 7 ,D (:/. &. @an%ary (* (?31 7 ,resent 7 ,D (??. b. I$#ro&e$ents i. @%ne (:* (?31 to 5ebr%ary .* (?33 7 RAAO 4731 ii. 5ebr%ary /* (?33 to 5ebr%ary (3* (??( 7 RAAO (733 iii. 5ebr%ary (?* (??( to (??. 7 RAAO +7?( i&. (??.75A> #er TD -Latest TD) &. Shares o! sto";s* obli ations or bonds 7 RAAO (73+ &i. Us%!r%"t* ann%ities* %se or habitation 7 5or$%la %sin A$eri"an Tro#i"al Ex#erien"e Table. =e innin @an%ary (* (??3* the &al%ation shall ta;e into a""o%nt the #robable li!e o! the bene!i"iary in a""ordan"e with the latest =asi" Standard Aortality Table. &ii. 5orei n "%rren"y and "ash in ban; 7 ,eso &al%e at ex"han e rate at the ti$e o! death. &iii. Other #ersonal #ro#erties 7 5air $ar;et &al%e at the ti$e o! death.

Personal Properties:
() +) 4) .) Shares o! sto";s* bonds and se"%rities. Interest in #artnershi#s* b%siness or ind%stry. <ash on hand and in ban;s. Aa"hineries* trans#ortation e8%i#$ents* !ar$ i$#le$ents* tools* !ar$ ani$als* et". /) Anti8%es* 'ewelry* sil&erware* #aintin s* et"hin s* en ra&in s* boo;s* stat%es* &ases* oriental r% s* "olle"tion o! sta$#s and "oins. 1) Bo%sehold !%rnit%res* !ixt%res* a##lian"es and other #ersonal e!!e"ts. 0) Us%!r%"t* ann%ities* %se or habitation.

3) Aort a e notes* #arti"i#ation "erti!i"ates* '%d e$ents* obli ations and a"tion whi"h ha&e !or their ob'e"t $o&ables or de$andable s%$s. ?) Goodwill* #atents* and trade$ar;s.

E"clusions and E"emption from the Gross Estate:

() Exe$#ted %nder S#e"ial Laws and Exe$#tions by O$ission9 a. GSIS #ro"eeds2bene!its b. A""r%als !ro$ SSS ". ,ro"eeds o! li!e ins%ran"e where the bene!i"iary is irre&o"ably a##ointed. d. ,ro"eeds o! li!e ins%ran"e %nder a ro%# ins%ran"e ta;en by the e$#loyer -Not ta;en o%t by the de"edent %#on his own li!e) e. CAR da$a e #ay$ents. !. US>A 7RA (41. . ,ro#erties held in tr%st by de"edent. h. Trans!er by way o! bona!ide sales. i. Trans!er o! #ro#erty to the National Go&ern$ent or to any o! its #oliti"al s%bdi&isions. '. Se#arate #ro#erty o! the s%r&i&in s#o%se. +) Exe$#ted %nder the Tax <ode9 a. Aer er o! %s%!r%"t in the owner o! the na;ed title. b. Trans$ission or deli&ery o! the inheritan"e or le a"y by the !id%"iary heir or le atee to the !idei"o$$issary. ". Trans$ission !ro$ the !irst heir* le atee or donee in !a&or o! another bene!i"iary in a""ordan"e with the desire o! the #rede"essor. d. All be8%ests* de&ises* le a"ies or trans!ers to so"ial wel!are*"%lt%ral and "haritable instit%tions* no #art o! the net in"o$e o! whi"h in%res to the bene!it o! any indi&id%al* #ro&ided that not $ore than 4:D o! whi"h shall be %sed !or ad$inistration #%r#oses -,D /:0* (?0.)

&llo'able (eductions:
() Ex#enses* losses* indebtedness and taxes9 a. 5%neral ex#enses9 i. <A .11 -@%ly (* (?4?) 7 /D o! ross estate ii. ,D 1? -@an%ary (* (?04) 7 /D o! ross estate b%t not ex"eedin ,/:*:::.:: iii. RA 0.?? -@%ly +3* (??+)7 /D o! ross estate b%t not ex"eedin ,(::*:::.::. i&. RA 3.+. -@an%ary (* (??3)7 /D o! ross estate b%t not ex"eedin ,+::*:::.:: b. @%di"ial ex#enses. ". <lai$s a ainst the estate i. <lai$s a ainst insol&ent #ersons ii. Un#aid $ort a es or indebtedness iii. Un#aid taxes i&. Losses &. Trans!er !or #%bli" #%r#oses &i. >anishin ded%"tion -,ro#erty #re&io%sly taxed) d. Share o! the s%r&i&in s#o%se in the net "on'% al #ro#erties E F o! the net "on'% al #ro#erties. e. 5a$ily Bo$e 7 A$o%nt allowable is e8%i&alent to the "%rrent or !air $ar;et &al%e or 6onal &al%e o! the de"edent's !a$ily ho$e* whi"he&er is hi her* b%t not ex"eedin ,(*:::*:::.

!. . h. i.

i. A%st not ex"eed the &al%e in"l%ded in the ross estate or ,(*:::*:::* whi"he&er is lower. ii. The a$o%nt in ex"ess o! ,(*:::*::: shall be s%b'e"t to estate tax. iii. A%st be the de"edent's !a$ily ho$e as "erti!ied to by the =aran ay <a#tain in the lo"ality. i&. Only one -() !a$ily ho$e $ay be "lai$ed. Standard Ded%"tion o! ,(*:::*:::. Aedi"al Ex#enses in"%rred within one year !ro$ death in an a$o%nt not ex"eedin ,/::*:::.::. A$o%nt Re"ei&ed by heirs %nder RA No. .?(0. Ded%"tions allowable to a non7resident de"edent who is not a "iti6en o! the ,hili##ines9 i. A #ro#ortion o! the ex#enses* losses* indebtedness and taxes9 5or$%la9 ,hil. Gross Estate 7777777777777777777777777 X Ex#enses* losses* indebtedness G taxes Corld Gross estate ii. Trans!er !or #%bli" #%r#oses iii. >anishin ded%"tion i&. Share o! s%r&i&in s#o%se 7 De#endin on the #ro#erty relationshi# o! the h%sband and wi!e in the "o%ntry where they are national.

%anishin) (eduction
Re8%isites9 () ,resent de"edent $%st ha&e died within !i&e -/) years !ro$ the date o! death o! #rior de"edent or date o! i!t. +) The #ro#erty with res#e"t to whi"h ded%"tion is "lai$ed $%st ha&e !or$ed #art o! the ross estate sit%ated in the ,hili##ines o! the #rior de"edent or taxable i!t o! the donor. 4) The #ro#erty $%st be identi!ied as the sa$e #ro#erty re"ei&ed !ro$ the #rior de"edent or donor or the one re"ei&ed in ex"han e there!ore. .) The estate taxes on the i!t $%st ha&e been !inally deter$ined and #aid. No &anishin ded%"tion on the #ro#erty was allowed to the #rior estate. P*+CE(,*E IN C+-P,!ING !.E %&NIS.ING (E(,C!I+N: () Deter$ine the initial &al%e o! the #ro#erty #re&io%sly taxedH R%le 7 >al%e o! I,ro#erty #re&io%sly TaxedI in "o$#%tin the estate tax or donor's tax o! the #rior trans!er or that o! the #resent de"edent's estate* whi"he&er is lower. +) Ded%"t any $ort a e or lien on the I,ro#erty ,re&io%sly TaxedI #aid by the #resent de"edent #rior to his death* where s%"h $ort a e or lien was a ded%"tion !ro$ the ross estate o! the #rior de"edent or i!t o! the donor. This is the IInitial =asisI. 4) The IInitial =asisI in Ste# -b) shall be !%rther red%"ed by the !ollowin ratio o! the ex#enses* losses* indebtedness* taxes or trans!er !or #%bli" #%r#oses9

Initial =asis 777777777777777777 #%bli" %se Gross estate

Ex#enses* losses* indebtedness taxes* trans!er !or

.) <o$#%te the !inal basis o! ,,T9 Initial =asis -Ste# -b) x x x Less9 Li$itation -Ste# -" ) x x x 5inal =asis -A$o%nt s%b'e"t to &anishin ded%"tion) x x x

: ( + 4 . /

/) Deter$ine the year inter&al between the date o! death o! the #rior and #resent de"edent or date o! i!t and death o! #resent de"edent to !ind the a##li"able #er"enta e ded%"tion9 7 ( year 7 (::D 7 + I 7 3:D 7 4 I 7 1:D 7 . I 7 .:D 7 / I 7 +:D o&er 7 :D

The !inal basis -Ste# -d) $%lti#lied by the #er"enta e ded%"tion -Ste# -e) will be the &anishin ded%"tion allowable. ./P+!.E!IC& E0&-P E +1 C+-P,!&!I+N +1 %&NIS.ING (E(,C!I+N: IAI a 5ili#ino* $arried and resident o! the ,hili##ines died on @%ly 4(* (??3 lea&in the !ollowin #ro#erties9 <on'% al #ro#erties 77777777777777777777777777777777777777777777777777777777777777777777777777777777 ,0*:::*:::.:: <on'% al !a$ily ho$e7777777777777777777777777777777777777777777777777777777777777777777777777777777 4*:::*:::.:: ,ro#erty &al%ed !or ,.*:::*::: was inherited !ro$ his !ather who died on @%ne 4:* (??0 to ether with a $ort a e loan o! ,(*:::*::: whi"h was #aid by IAI on A#ril 4:* (??3 7777777777777777777777777777777777777777777777777777777777777 /*:::*:::.:: Gross estate -------------------------------------------------------------------------------------- P123 4443444.44 Less: Deductions: Ex#enses* losses* indebtedness* taxes G trans!er !or #%bli" %se 7777777777777777777777777777777777777777777777777777777777777777777 ,+*:::*:::.:: Share o! s%r&i&in s#o%se9 <on'% al #ro#erties 77777777777777777777777777777777777777777777777777777777777777777777777777 ,(:*:::*:::.:: Less9 <on'% al ded%"tion 7777777777777777777777777777777777777777777777777777777777777777777777 +*:::*:::.:: Net "on'% al estate 777777777777777777777777777777777777777777777777777777777777777777777777777 , 3*:::*:::.:: (2+ share o! s%r&i&in s#o%se 777777777777777777777777777777777777777777777777777777777777777777 , .*:::*:::.:: 5a$ily ho$e

77777777777777777777777777777777777777777777777777777777777777777777777777777777777777777 (*:::*:::.:: >anishin ded%"tion -3:D) Inherited #ro#erty 77777777777777777777777777777777777777777777777777777777777777777777777777777 , .*:::*:::.:: Less9 Aort a e #aid 77777777777777777777777777777777777777777777777777777777777777777777777777777 (*:::*:::.:: Initial basis JSte# -b)K7777777777777777777777777777777777777777777777777777777777777777777777777777 4*:::*:::.:: Less9 4*:::*::: x ,+*:::*::: 77777777777777777777777777777777777777777777777777777777777777777777 .::*:::.:: (/*:::*:::.:: 5inal basis JSte# -d)K 777777777777777777777777777777777777777777777777777777777777777777777777777 , +*1::*:::.:: 3:D >anishin ded%"tion JSte# -e)K 7777777777777777777777777777777777777777777777777777777777 +*:3:*:::.:: !otal deductions -------------------------------------------------------------------------------- P 534643444.44 Net ta"able estate -------------------------------------------------------------------------------- P 235243444.44 <o$#%tation o! estate tax9 ,/*:::*::: 7777777777777777777777777777777777 ,.1/*:::.:: ?+:*::: L (/D 7777777777777777777777777 (43*:::.:: !otal estate ta" due ------------------------------- P 7483444.44

ES!&!E !&0 *&!ES: 9*.&. 6:2:; TBE ESTATE TAX SBALL =E Exe$#t : ,(/*::: (4/*::: .1/*::: (*+(/*::: ,LUS =elow ,+::*::: /D 3D ((D (/D +:D O5 EX<ESS O>ER : ,+::*::: /::*::: +*:::*::: /*:::*::: (:*:::*:::

!a" Credit 1or Estate !a"es Paid !o & 1orei)n Countr$:

() The estate tax d%e shall be "redited with the a$o%nt o! estate tax i$#osed by a !orei n "o%ntry on #ro#erty lo"ated in said !orei n "o%ntry and in"l%ded in the de"edent's ross estate in the ,hili##ines.

+) Li$itation on "redit 7 The a$o%nt o! "redit !or estate tax #aid to a !orei n "o%ntry shall not ex"eed the #ro#ortion o! the tax d%e in the ,hili##ines whi"h the de"edent's net estate sit%ated within s%"h "o%ntry bears to his entire net estate. 4) The total a$o%nt o! "redit shall not ex"eed the #ro#ortion o! the tax here in the ,hili##ines whi"h the de"edent's net estate sit%ated o%tside the ,hili##ines bears to his entire net estate.

*eciprocit$ Pro<ision +n !ransfer !a" Imposition:

() The #ro#erty in&ol&ed is intan ible #ersonal #ro#erty. +) The de"edent or donor at the ti$e o! death or donation was a "iti6en and resident o! a !orei n "o%ntry. 4) That the !orei n "o%ntry did not i$#ose a trans!er tax o! any "hara"ter in res#e"t o! intan ible #ersonal #ro#erty owned by a 5ili#ino "iti6en not residin in said !orei n "o%ntry* or .) The laws o! the !orei n "o%ntry allow a si$ilar exe$#tion !ro$ trans!er taxes or death taxes o! e&ery "hara"ter or des"ri#tion in res#e"t o! intan ible #ersonal #ro#erty owned by "iti6ens o! the ,hili##ines not residin in that !orei n "o%ntry. &(-INIS!*&!I%E P*+%ISI+NS +N ES!&!E !&0&!I+N &. Notice of (eath: When required: a) In all "ases o! trans!er s%b'e"t to taxH or b) Chere* tho% h exe$#t !ro$ tax* the &al%e o! the ross estate ex"eeds ,+:*:::.:: Time of filing: ") Cithin two -+) $onths a!ter the de"edent's death* or d) Cithin two -+) $onths a!ter the exe"%tor or ad$inistrator has 8%ali!ied. Who shall file notice of death: e) Exe"%tor !) Ad$inistrator ) Any o! the le al heirs =. Estate !a" *eturn: When required: a) In all "ases o! trans!er s%b'e"t to taxH or b) Chere* tho% h exe$#t !ro$ tax* the ross &al%e o! the estate ex"eeds ,+::*:::.::. ") Re ardless o! the ross &al%e o! the estate* where the said estate "onsists o! re istered or re isterable #ro#erty. Persons required to file: a) Exe"%tor b) Ad$inistrator ") Anyone o! the le al heirs Time for filing: a) <o$$onwealth A"t .11 7 @%ly (* (?4? 7 De"e$ber 4(* (?0+ Cithin six -1) $onths a!ter de"edent's death. Cithin twel&e -(+) $onths a!ter de"edent's death i! #ro"eedin s !or$ settle$ent was !iled in "o%rt within six -1) $onths a!ter death.

b) ,residential De"ree No. 1? 7 @an%ary (* (?04 to De"e$ber 4(* (?3/. Cithin nine -?) $onths a!ter de"edent's death. Cithin twenty7one -+() $onths a!ter de"edent's death #ro"eedin s !or settle$ent was !iled in "o%rt within nine -?) $onths a!ter death. ") ,residential De"ree No. (??. 7 @an%ary (* (?31 to @%ly +0* (??+. Cithin ninety -?:) days a!ter de"edent's death d) Re#%bli" A"t 0.?? 7 @%ly +3* (??+ to #resent9 Cithin six -1) $onths a!ter de"edent's death Extension to File Return: Not ex"eedin thirty -4:) days in $eritorio%s "ases. Place of Filing: a) O!!i"e o! the <o$$issioner o! Internal Re&en%e b) O!!i"e o! the Re&en%e Distri"t O!!i"er* <olle"tion O!!i"er or a%thori6ed treas%rer o! the A%ni"i#ality in whi"h the de"edent was do$i"iled at the ti$e o! death.

C. Pa$ment of Estate !a": Time of payment: a) <o$$onwealth a"t .117@%ly (* (?4? to De"e$ber 4(* (?0+9 Estate and Inheritan"e taxes7 ,ayable within nine -?) and Twel&e -(+) $onths* res#e"ti&ely* a!ter death. Estate and inheritan"e taxes 7 ,ayable within twenty one -+() and twenty7!o%r -+.) $onths* res#e"ti&ely* i! #ro"eedin s !or settle$ent o! estate was !iled in "o%rt within six -1) $onths a!ter death. b) ,residential De"ree No. 1? 7 @an%ary (* (?04 to De"e$ber 4(* (?3/9 Estate tax is #ayable at the ti$e the ret%rn is !iled. -Cithin nine -?) days or twenty7one -+() $onths* as the "ase $ay be) ") ,residential De"ree No. (??. 7 @an%ary (* (?31 to @%ly +0* (??+9 Estate tax is #ayable at the ti$e the ret%rn is !iled -Cithin ninety -?:) days a!ter death) d) Re#%bli" A"t 0.?? 7 @%ly +3* (??+ to #resent9 Estate tax is #ayable at the ti$e the ret%rn is !iled -Cithin six -1) $onths a!ter death) Extension to #ay estate tax a) Two -+) years 7 Estate is settled extra'%di"ially. b) 5i&e -/) years 7 Estate settled '%di"ially. Surcharges: a) Late !ilin o! estate tax ret%rn 7 +/D o! tax d%e #er ret%rn @%ly (* (?4? to De"e$ber 4(* (?0+ 7 Dis"retionary or $aybe wai&ed i! a) The ret%rn is &ol%ntarily !iled witho%t noti"e !ro$ the <o$$issioner b) The !ail%re to !ile the ret%rn on ti$e was d%e to a reasonable "a%se. b) Late #ay$ent o! tax9

@%ly (* (?4? to A% %st (* (?3: 7 /D A% %st (* (?3: to De"e$ber 4(* (?3/ -,D (0:/)(:D @an%ary (* (?31 to #resent -,D (??.) +/D nterests: a) @%ly (* (?4? to Se#te$ber (* (?1? -<A .11) Tax #er ret%rn (+D De!i"ien"y tax 1D b) Se#te$ber (* (?1? to De"e$ber 4(* (?0+ -RA 1((:* 32.21?)7777777777777777777777(+D ") @an%ary (* (?04 to @an%ary (1* (?3( -,D 1?* ((2+.20+)7777777777777777777777(.D d) @an%ary (1* (?3( to #resent -,D (004* (2(123()777777777777777777777777777777+:D Place of filing of return and payment of tax: a) <o$$issioner o! Internal Re&en%e* or b) Re ional Dire"tor* Re&en%e Distri"t O!!i"er or <olle"tion O!!i"er o! the "ity or $%ni"i#ality in whi"h the de"edent was do$i"iled at the ti$e o! his death. Person lia!le to pay estate tax: a) Exe"%tor or ad$inistrator be!ore distrib%tion o! estate b) Beir or bene!i"iary s%bsidiarily liable to the extent o! his distrib%ti&e share.

(+N+*>S !&0
(efinition and Concepts:
Gi!t tax is an ex"ise on the trans!er by a li&in #erson to another o! $oney or other #ro#erty witho%t "onsideration. Donation is an a"t o! liberality whereby a #erson dis#oses rat%ito%sly o! a thin or ri ht in !a&or o! another* who a""e#ts it.

?hat Constitutes & @Gift@ 1or Gift !a" PurposesA

(. Trans!er o! #ro#erty witho%t "onsideration. +. It also in"l%des sales* ex"han es and other dis#ositions o! #ro#erty !or a "onsideration to the extent that the &al%e o! the #ro#erty trans!erred ex"eeds the &al%e in $oney or $oney's worth o! the "onsideration re"ei&ed there!or.

Concept of Consideration:
(. <onsideration $%st be $eas%rable in $oney or $oney's worth. Aere le al "onsideration is not s%!!i"ient. +. The "onsideration $%st !low to the donor* $ere detri$ent to the donee does not satis!y the #%r#ose o! the stat%te. "ommissioner #$ Wemyss %&'( )$S$ &*&+ ,-(./ 0arriage is not a consideration reduci!le to money 1alue$ f a person transfers a property to a trust in consideration of marriage+ a gift is made !ecause no money consideration flo2s to the transferor3donor$ Donati1e intent on the part of the tranferor is not an essential element for the imposition of the gift tax to the transfer$

?hen (oes !he @Gift@ +ccurA

A i!t o""%rs when the donor s%rrenders <ONTROL o&er the #ro#erty. I! the donor retains an %nli$ited #ower to re&o;e the i!t* it is "lear that no i!t has o""%rred. ty re!erred to in Se"tion +.-D) and Se"tion +0-D)-/) o! the NIR<).

*eBuisites of & !a"able Gift:

(. +. 4. .. <a#a"ity o! the donor Donati&e intent -Ex"e#t i!t %nder Se"tion ?4 NIR<) A""e#tan"e by the donee* and Deli&ery o! the i!t to the donee* a"t%ally or "onstr%"ti&ely.

#inds of (onation:
(. Inter7&i&os +. Aortis "a%sa 4. Indire"t donation -Ex"e#t real #ro#erty re!erred to in Se"tion +.-D) and Se"tion +0-D)-/) o! the NIR<).

Persons SubCect to (onor>s !a":

(. -Sa$e as in estate tax) =e!ore Se#te$ber (* (?1? 7 Only donation $ade by indi&id%al is s%b'e"t to donor's tax. +. On or a!ter Se#te$ber (* (?1? -RA 1((:) Donation $ade by all #erson* whether nat%ral or '%ridi"al* is s%b'e"t to donor's tax.

Gross Gifts:
(. <o$#osition 7-Sa$e as in estate tax) +. >al%ation 7 At the ti$e the i!t was $ade -Sa$e as in estate tax)

(eductions from the Gross Gift:

(. Dowries or i!ts by #arents to "hildren on a""o%nt o! $arria e* be!ore its "elebration or within one -() year therea!ter to the extent o!,(:*:::. +. Gi!ts to the National Go&ern$ent or any o! its a en"ies. 4. Gi!ts $ade in !a&or o! an ed%"ational* and2or "haritable* reli io%s* "%lt%ral or so"ial wel!are "or#oration* !o%ndation* tr%st or #hilanthro#i" or ani6ation or resear"h instit%tion or or ani6ation. .. En"%$bran"e on the #ro#erty donated i! ass%$ed by the donee in the deed o! donation. /. Those s#e"i!i"ally #ro&ided by the donor as a "ondition o! the donation whi"h will di$inish the &al%e o! the #ro#erty re"ei&ed by the donee. 1. Exe$#t donation %nder s#e"ial laws.

!a" Pa$able b$ the (onor:

(. On or be!ore De"e$ber 4(* (?0+9 a. Donor's and donee's i!t taxes were i$#osed based on rad%ated rates. b. Gi!ts $ade d%rin #re&io%s year or years are "ollated to the #resent i!t and the i!t tax "o$#%ted on the total i!t. +. @an%ary (* (?04 to @an%ary (/* (?3( -,D 1?) a. Donor's tax was i$#osed on rad%ated rates. b. Gi!ts $ade d%rin the #re&io%s year or years are "o$#%ted se#arately. ". Donor's tax "o$#%ted on the total i!ts $ade d%rin ea"h "alendar year. d. <ollation o! i!ts are $ade only on i!ts $ade d%rin the sa$e "alendar year. 4. @an%ary (1* (?3( to @%ly +0* (??+ -,D (004) a. Tax #ayable by the donor in !a&or o! relati&es is "o$#%ted based on the rad%ated rates. b. Tax #ayable by the donor in !a&or o! stran er is "o$#%ted at +:D or based on rad%ated rates* whi"he&er is hi her. ". Gi!ts $ade d%rin the sa$e "alendar year are "ollated and the donor's tax "o$#%ted on the total i!ts d%rin the "alendar year. .. @%ly +3* (??+ to De"e$ber 4(* (??0 -RA 0.??) a. Tax #ayable by the donor on i!ts $ade in !a&or o! relati&es is "o$#%ted based on rad%ated rates. b. Tax #ayable by the donor on i!ts $ade in !a&or o! stran ers is "o$#%ted at (:D o! the net i!ts. /. @an%ary (* (??3 to #resent -RA 3.+.) a. Tax #ayable by the donor on i!ts $ade in !a&or o! relati&es is "o$#%ted based on rad%ated rates. b. Tax #ayable by the donor on i!ts $ade in !a&or o! stran ers is "o$#%ted at 4:D o! the net i!ts. 1. Relati&es !or donor's tax #%r#oses9 a. S#o%se* an"estor and lineal de"edent b. =rother* sister -whether by whole or hal! blood)

". Relati&es by "onsan %inity in the "ollateral lines within the !o%rth de ree o! relationshi#.

*ates of (onor>s !a" 9*& 6:2:;

(onations to *elati<es 9Graduated !able;
TBE DONORMS TAX SBALL =E Exe$#t : +*::: (.*::: ..*::: +:.*::: .:.*::: (*::.*::: ,LU S : +D .D 1D 3D (: D (+ D (/ D O5 EX<ESS O>ER : ,(::*::: +::*::: /::*::: (*:::*::: 4*:::*::: /*:::*::: (:*:::*:::

(onations to Stran)er - 84D

S&-P E P*+= E- +1 (+N+*>S !&0 Ar. @ose#h Ra$os* sin le $ade the !ollowin donations9 (. @an%ary (/* (??? 7 to his !rother* @%n* ,(::*::: +. Aar"h (:* (??? 7 to <lara* his sister* ,+/:*::: 4. Se#t 3* (??? 7 to his girlfriend* Loi* a brand new "ar worth ,1::*::: .. O"t +/* (??? 7 to his father* <arlos* a &a"ant lot worth ,(*:::*::: w2 5A> o! ,3::*::: and 6onal &al%e o! ,(*/::*::: /. No& (+* (??? 7 to L%is* his !rother in la2* ,+::*::: 1. 5eb (.* +::: 7 to his mother* Aaria* ,4::*::: Answer9 Date a) (2(/2?? b) (2(/2?? 42(:2?? Donation <ash <ash <ash A$o%nt (::*::: -brother) (::*::: +/:*::: -sister) 4/:*::: Tax D%e Exe$#t

") ?232??

Tax on9 +::*::: NNNNNNNNNNNNNNNN +*::: (/:*::: x .D NNNNNNNNNNNN 1*::: 3*::: Less9 Tax on #re&io%s donation -donation a)NNNNNNNNNNNN :::: 3*::: <ash 1::*::: -Stran er)

Tax D%e9 1::*::: x 4:DNNNNNNNNNN (3:*::: d) (:2+/2?? 42(:2?? (2(/2?? Lot <ash <ash (*/::*::: -O>) -!ather) +/:*::: (::*::: (*3/:*:::

Tax on9 (*:::*::: NNNNNNNNNNNNNN ..*::: 3/:*::: x 3D NNNNNNNNNNNN 13*::: ((+*::: Less: Tax on #re&io%s donation -donation a 4 !) 3*::: (:.*::: e) ((2(+2?? <ash +::*::: -Stran er) Tax D%e9 +::*::: x 4:D NNNNNNNNNN 1:*::: 4::*::: -brother7in7law) Tax On9 +::*::: NNNNNNNNNNNNNNNN

!) +2(.2+::: +*:::

<ash

(::*::: x .D NNNNNNNNNNN .*::: 1*::: Note9 Letter -!) was donated in year +::: there!oreH this is not in"l%ded in the "%$%lati&e total !or (???'s donations. &(-INIS!*&!I%E *EE,I*E-EN!S +N (+N+*>S !&0 &. (onor>s !a" *eturn: (. Re8%ire$ents -State the !ollowin in!or$ation2data)9 a. Ea"h i!t $ade d%rin the "alendar year b. Ded%"tions "lai$ed and allowable ". ,re&io%s net i!ts d%rin the sa$e "alendar year d. Na$e o! donee and address e. Other #ertinent in!or$ation +. Ti$e o! !ilin 9 a. =e!ore De"e$ber 4(* (?0+9 On or be!ore Aar"h ( !ollowin the "lose o! the "alendar year. b. @an%ary (* (?04 to De"e$ber 4(* (??0 Cithin thirty -4:) days a!ter ea"h donation. Extension not ex"eedin thirty -4:) days $aybe ranted. ". @an%ary (* (??3 to #resent Cithin thirty -4:) days a!ter ea"h donation7 No Extension 4. ,la"e o! !ilin o! donor's tax ret%rn a. <o$$issioner o! Internal Re&en%e b. Re&en%e Distri"t O!!i"er* <olle"tion O!!i"er or d%ly a%thori6ed Treas%rer o! the $%ni"i#ality where the donor was do$i"iled at the ti$e o! donation. =. Pa$ment of (onor>s !a":

(. Donor's tax sho%ld be #aid at the ti$e the ret%rn is !iled or within thirty -4:) days a!ter the date o! i!t. +. Extension to #ay tax $ay be ranted not ex"eedin six -1) $onths. E!!e"ti&e @an%ary (* (??3 -RA 3.+.)* no extension !or the #ay$ent o! the donor's tax shall be ranted. C. Surchar)es: -Sa$e as estate tax) (. Interest: -Sa$e as estate tax)