Professional Documents
Culture Documents
I. Ordinary Deductions
Casualty Losses
- Losses of properties of the estate which arises from casualties such as fires, storms, shipwreck, robbery, theft
or embezzlement that are not compensated by insurance
- Requisites:
1. The loss must be a sustained casualty loss
2. The loss must occur during the settlement of the estate up to the deadline of the estate tax return
3. The loss must not be concurrently claimed in the income tax return
Claims against insolvent persons
- A form of loss but are presented separately in the estate return
- The deductible amount is the unrecoverable amount of claim
Claims against the estate
- May arise out of contract, torts or operations of law
- Requisites:
1. The liability represents a personal obligation of the deceased existing at the time of his death
2. The liability was contracted in good faith and for adequate and full consideration for money
3. The claim must be a debt or claim which is valid and enforceable
4. The claim must not have been condoned by the creditor or must not have been prescribed
- Classification rules:
1. Family benefit rule
o The claim shall be classified as deduction against the common property if the obligation was
incurred or contracted for the benefit of the family.
2. Property classification rule
o Claims follow the classification of the relevant property.
Unpaid mortgages
- A form of claim against the estate but are presented separately in the estate return.
- Includes mortgage upon, or any indebtedness, with respect to property where the value of the decedent's
interest therein, undiminished by such mortgage or indebtedness, is included in the gross estate.
- To be deductible, it must be incurred before death and remain unpaid at the point of death
Property previously taxed [Vanishing Deduction]
- Can be claimed only if there is an incidence of double taxation
- Its purpose is to minimize the burden of double taxation
- Requisites:
1. The present decedent must have died within 5 years from the date of death of the prior precedent or date
of gift
2. The property must have been previously subjected to a transfer tax
3. The property must have been identified as the same property received from prior decedent or donor
4. The estate taxes on the transmission of the prior estate or the donor's tax on gift must have been finally
determined or paid
Transfer for public use
- Includes all bequests, legacies, devices, or transfer to or for the use of the government for public purposes
- Must be indicated in the decedent's last will and testament
Others
A. Unpaid taxes
- A form of claim against the estate presented under the category "others" in the estate return
- Includes taxes such as income tax, business tax, and property tax which have accrued as of the death of
the decedent and which were unpaid as of the time of death