Vanishing Deductions (Property Previously Taxed)

Requisites:
 The decedent died within 5 years from receipt of the property from a prior decedent or donor;
 The property must have formed part of the taxable estate of the prior decedent or the taxable
gift of the donor and the transfer tax relative thereto had been paid;
 The property on which vanishing deduction is being taken must be identified as the one received
from the prior decedent, or from the donor, or something acquired in exchange therefore;
 No vanishing deduction on the property was allowable to the estate of the prior decedent.

AMOUNT DEDUCTIBLE (PROFORMA COMPUTATION):

Value to take (lower between FMW at the time of death vs FMV at the time of
Inheritance or donation) P xx
Less: Mortgage paid by the present decedent (on mortgaged assumed) xx
Initial Basis (IB) xx
Less: Proportional deduction
(Initial basis / gross estate) x ( LITE + TFPU) xx
Final basis xx
Rate x%
Vanishing Deduction P xx

Rate of Vanishing Deduction:

Interval Of Acquisition And Death Of Present

Decedent Rate
Within 1 year 100%
More than 1 year but not more than 2 years 80%
More than 2 year but not more than 3 years 60%
More than 3 year but not more than 4 years 40%
More than 4 year but not more than 5 years 20%