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TAXATION II PART II TRANSFER TAXES (Secs. 84 to 104 of the NIRC as implemented by Revenue Regulations (RR) No. 2-03) I.

Nature of Transfer Taxes II. Estate Tax A. Nature of Estate Tax 1. Definition 2. Tax Exempt Net Estate (Sec. 84) 3. Minimum and Maximum Rates (Sec. 84) 4. Accrual of Estate Tax vs. Liability for Payment (Sec. 3 of RR No. 2-03) Lorenzo vs. Posadas (64 Phil. 383) B. Composition of the Gross Estate (Sec. 104) / (Sec. 4 of RR No. 2-03) 1. Residents and Citizens 2. Non-resident aliens a. Rule on Reciprocity CIR vs. Campos Rueda (42 SCRA 23) CIR vs. Fisher (1 SCRA 93) 3. Gross Estate (Secs. 85 and 104) a. Valuation (Sec. 85 and 88) (Sec. 5 of RR No. 2-03) 1. Real Property 2. Personal Property 3. Shares of Stock 4. Usufruct b. Decedents Interest c. Transfer in Contemplation of Death d. Revocable Transfer e. Property Passing Under General Power of Appointment f. Proceeds of Life Insurance g. Prior Interest h. Transfers for Insufficient Consideration i. Capital of Surviving Spouse C. Deductions from the Gross Estate (Sec. 86) (Sec. 6 of RR No. 2-03) 1. Allowed to Residents and Citizens 2. Allowed to Non-resident alien (See also Sec. 86 D) a. Limitation (Sec. 7 RR No. 2-03) 3. Allowable Deductions a. Ordinary Deductions (Expenses, Losses, Indebtedness and Taxes) 1. Funeral Expenses a. Limitation b. Examples c. Items not deductible d. Substantiation requirement e. How computed 2. Judicial Expenses a. Examples CIR vs. CA and Pajonar (GR No. 123206 dated March 22, 2000)

a. Requisites for deductibility i. Simple Loan ii. Unpaid obligation from purchase of goods iii. Court Settlement Dizon vs. CTA (GR No. 140944 dated April 30, 2008) 4. Claims against insolvent persons 5. Unpaid Mortgages, Taxes and Casualty Losses a. Rules b. Special Deductions 1. Vanishing Deduction a. Requisites for deductibility 2. Transfers for Public Use 3. Family Home 4. Standard Deduction a. Requisites for deductibility 5. Medical Expenses a. Limitation b. Substantiation requirement c. How computed 6. Amount Received by Heirs Under Republic Act No. 4917 D. Exclusion from Net Estate and Exemptions (Secs. 86 C and 87) E. Foreign Estate Tax Credit/s (Sec. 86 E) F. Notice of Death (Sec. 89) G. Estate Tax Returns and Payment of Tax (Secs. 90 and 91) 1. When required and contents 2. Time of Filing / Extension of time to file 3. Place of Filing 4. Time of Payment / Extension of time to pay H. Other Matters 1. Who is liable to pay? [Sec. 91 (C)] Estate of Vda. De Gabriel vs. CIR (GR No. 155541 dated January 27, 2004) a. Discharge of Executor or Administrator from Personal Liability (Sec. 92) b. Liability of Heirs CIR vs. Pineda (21 SCRA 105) 2. Payment Before Delivery by Executor (Sec. 94) Marcos II vs. CA 273 SCRA 47 3. Duties of Certain Officers (Sec. 95) 4. Restitution of Tax Upon Satisfaction of Outstanding Obligations (Sec. 96) 5. Payment of Tax Antecedent to the Transfer of Shares, Bonds or Rights (Sec. 97) III. Donors Tax

3. Claims against the Estate

A. Nature of Donors Tax Lladoc vs. Vs. CIR (14 SCRA 292)

Pirovano vs. CIR (14 SCRA 832) 1. Definition 2. Composition of Gross Gift (Secs. 98 and 104) 3. Tax Exempt Net Gift (Sec. 99) 4. Minimum and Maximum Rates (Sec. 99) 5. Who is a stranger and applicable tax rate (Sec. 99) B. Composition of the Gross Gifts (Sec. 104) 1. Residents and Citizens 2. Non-resident alien a. Rule on Reciprocity 3. Corporations 4. Valuation of Gifts made in property (Sec. 102) 5. Exemption of Certain Gifts (Sec. 101) a. Residents and Citizens b. Non-residents aliens c. Corporations C. Other Matters 1. Rule on Political Contributions [Sec. 99 C] (Secs. 13 and 14 RA No. 7166) (RR No. 72011) 2. Transfer for Less than adequate and full consideration (Sec. 100) 3. Manner of Computing the Donors Tax (Sec. 12 RR No. 2-03) 4. Tax Credit for Donors Taxes paid to a Foreign Country [Sec. 101 (C)] 5. Renunciation of share in the conjugal partnership or absolute community; and, hereditary estate (Sec. 11 RR No. 2-03) D. Filing and Payment of Returns (Sec. 103) / (Sec. 13 RR No. 2-03) 1. Requirements 2. Time and Place of Filing 3. Notice of Donation Exemption from Donors Tax