Name: Napoleon C.

Lomotan Professor: Dean Cordova

Year and Section: BSA-4A Date: January 23, 2019

Assignment #1

1. What is transfer?
 A transfer tax is a tax on the passing of title to property from one person (or
entity) to another.
 A change in ownership of an asset, or a movement of funds and/or assets from
one account to another. A transfer may involve an exchange of funds when it
involves a change in ownership, such as when an investor sells a real estate
holding. In this case, there is a transfer of title from the seller to the buyer and a
simultaneous transfer of funds, equal to the negotiated price, from the buyer to
the seller.
 The term transfer may also refer to the movement of an account from one bank
or brokerage to another.

Transfer is a term that has a broad connotation among various industries and
transaction types. Below are a few examples of how a transfer is triggered for an
individual, group, or company.

 Banking: Moving funds among two or more accounts held by the same or
different entities.
 Real estate: Conveyance of title to a property from the seller to the buyer
through a deed of transfer, following payment of the price.
 Securities trading: Delivery of a stock (share) certificate by the seller's broker to
the buyer's broker followed by conveyance of the title by recording the change
in the stock (share) register.
2. Types of transfer?
1. Bilateral transfers - involve transmission of property for a consideration. They are
referred to as onerous transaction exchange. Ex: Sales and Barter
2. Unilateral transfers - involves the transmission of property by a person without
consideration. They are commonly referred to as gratuitous transaction or simply,
transfers
3. Complex transfers - are transfers for less than full and adequate consideration. These
dales made at prices which are significantly lower than the fair value of property sold.
3. What constitutes an adequate consideration?
 Adequate consideration refers to a price which is equal in value for an act or a
thing for which it is given. The price can be in the form of money, property, an
act, and promise to do an act or not to do an act. Inadequate consideration is not
void; however, it can make a contract unenforceable either by itself or due to
procedural defects in bargaining. For example, If A promises B, A’s house worth
$25,000 for $5, then this would be inadequate consideration.
4. Types of transfer taxes.
There are three types of “transfer” taxes:
 the estate tax, which is imposed on transfers of property at death;
 the gift tax, which is imposed on lifetime gifts; and
 The generation-skipping transfer tax (the “GST tax”), which is imposed on certain
transfers to or in trust for grandchildren and more remote descendants.
5. What are the classifications of transfer taxpayers?
 Taxpayers can be classified into two major categories – individual and
corporation. A corporation is a legal entity that is separate from the owners for
tax purposes. These major categories can be further divided in different
subcategories.

Individual taxpayers can be classified as either a citizen or an alien (an alien is a

person who resides within the borders of a country and is not a national of that
country). A citizen can further be classified as either a resident citizen or a non-
resident citizen.

Corporations can be classified into domestic, foreign and partnership. A foreign

corporation is either resident foreign or non-resident foreign corporation. A
resident foreign corporation is a foreign corporation engaged in trade or
business in the country. A non-resident foreign corporation is a foreign
corporation not engaged in trade or business within the country but deriving
income from sources in the country. A partnership is a business structure where
ownership and management responsibility of a company is split between two or
more individuals. A partnership is not a legal entity that is separate from the
owners and therefore the partnership itself does not pay taxes.
6. What is donation inter-vivos?
 Donation inter vivos refers to donation of personal property made by the donor
made during his/her lifetime, delivered to the donee with the intention of
irrevocably surrendering control over the property. Contrary to donatio mortis
causa, donation inter vivos takes place when the donor is not in immediate
 apprehension of death. It is also termed as gift inter vivos, lifetime gift or
absolute gift.
7. What is donation mortis causa?
 A gift in prospect of death. When a person in sickness, apprehending his
dissolution near, delivers, or causes to be delivered to another, the possession of
any personal goods to keep as his own, in case of the donor's decease.
8. What is incomplete transfer?
 Incomplete transfer refers to a decedent’s inter vivos transfer that is not
completed for federal estate-tax purpose. This is because the decedent retains
significant powers over the property’s possession or enjoyment. Because, the
transfer is incomplete, some or all of the property’s value will be included in the
transferor’s gross estate.
9. What are the types of incomplete transfer?
 Conditional transfer
 Revocable transfer
 Transfer in contemplation of death
 Transfers with reservation of title to property until death.
10. What is succession?
 A mode of acquisition by virtue of which the property, rights and obligation to
the extent of the value of the inheritance, of a person are transmitted through
his death to another or others either by will or by operation of law.
11. Types of succession.
 Testamentary- made in a will executed in the form prescribed by law
 Intestate- no will or if there is, the same is void or nobody will succeed.
 Mixed- partly by will and partly by law.
12. What is will?
 An act where by a person is permitted with the formalities prescribed by law, to
control to a certain degree the disposition of his estate, to take effect after his
death.
13. Types of will.
1. Holographic will - a will which is entirely written, dated, and signed by the hand of
the testator himself
2. Notarial will - a notarized will signed by the decedent and witnesses
3. Codicil - a supplement or addition to a will made after the execution of a will and
annexed to be taken as a part thereof, by which disposition made in the original will is
explained, is added to, or altered. (Art 825, Ibid.)
14. What are the elements of succession?
  Decedent- the person whose property is transmitted through succession,
whether or not he left a will.
 Heir- the person called to the succession either by provision of a will or by
operation of law.
 Estate- refers to all the property, rights and obligation of a person which are not
extinguished by his death.
15. Types of compulsory heirs.
1. Primary heirs - Legitimate children and their direct descendants
2. Secondary heirs - Legitimate/illegitimate parents and ascendants
3. Concurring heirs - The surviving spouse and illegitimate descendants
16. What is estate taxation?
 Legitimate children and their legitimate descendants.
 Legitimate parents and legitimate ascendants. (In default of No.1)
 Surviving spouse (legitimate)
 Illegitimate children and their descendants (legit. and illegit.)
 Illegitimate parents (No other ascendants, in default of 2 and 3) 07/07/14 17
17. Natures of estate taxation.
1. Excise tax - estate tax is not a tax on the property but on the privilege to transfer
property through death
2. Revenue or General Tax - estate tax is intended as a revenue or fiscal measure
3. Ad Valorem Tax - estate tax is dependent upon the value of the estate
4. National Tax - estate tax is imposed by the national government
5. Progressive Tax - estate tax is determined based on a tax table of progressive rates.
18. What is gross estate?
 Gross estate is the total value of an individual's property and assets at the time
of their death. The gross estate figure does not reflect liabilities such as debt
owed and taxes.
19. Distinguish the extent of gross estate of each type of decedent taxpayer.

20. Composition of gross rate.

1. Properties, movable or immovable, tangible or intangible
2. Decedent's interest on properties
3. Proceeds of life insurance:
 Designated as revocable to any heir
 Regardless of designation, if the beneficiary is the estate, administrator or
executor
4. Taxable transfer
21. Valuation of the gross estate.
Properties subject to estate tax shall be appraised at their fair value at the point of
death. Conceptually, "fair value" refers to the amount at which two willing independent
buyers and sellers could transact an exchange. The valuation rules are the following:
 The fair value of the property as of the time of death shall be The value to include in
gross estate.
 Fair value rules set by law or revenue regulations must be followed.
 In default of such fair value rules, reference may be made to fair value rules under
generally accepted accounting principles.
 Encumbrances on the property or decrease in value thereof after death shall be
ignored.
22. What is a property regime?
 A property regime is the set of rules agreed upon by the parties, before getting
married, which would govern their property relations during the course of their
married life.
23. Enumerate and briefly discuss the types of property regime?
1. Absolute separation of property (ASP) - Technically, all properties of the spouses are
separate properties, except those properties which they may acquire jointly.
2. Conjugal partnership of gains (CPG) - All properties that accrue as fruit of their
individual or joint labor or fruits of their properties during the marriage will be common
properties of the spouses.
3. Absolute community of property (ACP) - All present properties owned by the spouses
at the date of celebration of the marriage shall become common properties of the
spouses including future fruit of their separate or joint industry or fruits of their
common properties.
24. Compare the absolute community of property to the conjugal partnership of gains.
 Under absolute community of properties (ACP), marriage is viewed as a union of
the present property of the spouses including fruits of labor and industries of the
spouses during the marriage. While in conjugal partnership of gains (CPG), the
properties of the spouses including fruits before the marriage are their exclusive
properties. Conjugal partnership of gains views marriage as a union of gains that
accrues during the marriage. Hence, all fruits of labor and fruits of properties of
the spouses during the marriage starting from the date of celebration of the
marriage are considered common properties. Since common properties begin to
accrue only from the date of marriage, this property regime is best described as
prospective.
25. Enumerate and discuss the list of exclusive properties under absolute community of
property.
All properties of the spouses are effectively common with the exception of the following
week the law designated as exclusive properties of the spouses:
 Properties received by way of gratuitous title during the marriage.
 Fruits of separate properties of the spouses.
 Properties for the exclusive personal use of either of the spouses, except jewelry.
Properties brought into the marriage by either spouse with a descendant by a prior
marriage.