ESTATE TAX

VALUATION:
JUSTIFICATION:
General:
Benefit received FMV at the time of death
Privilege/state partnership
Ability to pay Specific:
Redistribution of wealth Real property

CLASSIFICATION:

Citizen All properties within and without Personal property

Resident alien All properties within and without
Non-resident alien All properties within Shares of stock

EXEMPTIONS AND EXCLUSIONS FROM THE GROSS ESTATE:

Exclusions under Section 85 and 86 of the Tax Code

Exclusive property of the surviving spouse Units of participation
Property outside of the PH of an NRA
Intangible personal property in the PH of an NRA (reciprocity) Right to usufruct, use or habitation, and annuity

Exclusions under Section 87 of the Tax Code

Merger of usufruct in the owner of the naked title
Transmission or delivery of inheritance by the fiduciary heir to a fideicommissary
Property under special power of appointment
Bequests, devises, legacies, or transfers to social welfare, cultural and charitable institutions, no part of the net income inures to
provided however that not more than 30% shall be used by such institutions for administration purposes (BIR has power to exe

Exclusions under Special Laws

Proceeds of life insurance and benefits received by the members of GSIS (RA 728)
Accruals and benefits received by members from the SSS by reason of death (RA 1792)
Life insurance proceeds from a policy taken out by the decedent himself, upon his own life, where the beneficiary is a third per
Life insurance proceeds on insurance policy (group insurance) taken out by his employer on the employee's life, whoever the be
Amounts received from Philippine and United States governments for war damages (RA 227)
Payments from the PH of US government to the legal heirs of deceased WWII veterans and deceased civilians for supplies/serv
Amounts received from US Veterans Administration
Transfer by way of bona fide sales
Properties held in trust by decedent
Acquisition and/or transfer expressly declared as not taxable
Personal Equity and Retirement Account (PERA) assets of the decedent-contributor (RA 9505)

INCLUSIONS IN THE GROSS ESTATE

Property OWNED by the decedent ACTUALLY AND PHYSICALLY PRESENT IN HIS ESTATE at the time of his death

Propery NOT PHYSICALLY IN HIS ESTATE (transferred during the lifetime of the decedent but still subject to estate tax):
Transfer in contemplation of death
Transfer with retention or reservation of certain rights
Revocable transfers
Transfers under a general power of appointment
Transfer for insufficient consideration
Claims against insolvent persons
Proceeds of life insurance (two requisites)

Decedent's interest
 Higher between:
FMV (Commissioner)
FMV (schedule of values - provincial/city assessors)

FMV at the time of death

Unlisted common share: Book value per share of issuer

Unlisted preference share: Par value per share
Listed shares: Arithmetic mean between the highest and lowest
quotation at a date nearest the date of death.

Bid price nearest the date of death (GC newspaper/publication)

or habitation, and annuity Latest Basic Standard Mortality Table (taking into account probable
life of beneficiary, approved by the Secretary of Finance upon recommendation
of Insurane Commissioner

of the net income inures to the benefit of any individual

ses (BIR has power to exemption determination)

e beneficiary is a third person and is irrevocably designated

oyee's life, whoever the beneficiary, revocable or irrevocable

civilians for supplies/services furnished to the US and PH army (RA 136)

e time of his death

subject to estate tax):

hest and lowest
Problem 3 Problem 1
Community property:
Earnings 125,000.00 Land
Interest 1,500.00 Income
Car 225,000.00 House and lot
House and Lot 1,000,000.00 Rental income
Farmland 1,200,000.00 Coconut land
Income from farmland 300,000.00 CL income
Gross estate 2,851,500.00 Jewelries
Savings deposit
Problem 4 Interest

Conjugal Properties: 370,000.00

Exclusive Properties: Exclusive Property:
Business interest 560,000.00 Lord Allan
Income from business 98,000.00 Subdivision lot
Time deposit 100,000.00 Rent income
Appliances 90,000.00 Time deposit
Others 500,000.00 Interest
Gross estate 1,718,000.00

Problem 5

Condominium 1,500,000.00
Personal property 500,000.00
GROSS ESTATE 2,040,000.00

DEDUCTIONS:

Ordinary deductions:
Worldwide ELIT:
Funeral expenses 200,000.00
Judicial expenses 60,000.00
Unpaid mortgage 250,000.00
Losses from shares of stock 65,000.00
Claims against insolvent 40,000.00
Medical expenses 20,000.00
635,000.00
Allowable ELIT Rate 25.50%
Allowable ELIT: 161,925.00

Transfer for public use: -

Vanishing deductions: -
Special deductions:
Standard deduction 500,000.00

TOTAL DEDUCTIONS - 661,925.00

TAXABLE NET ESTATE 1,378,075.00

Estate Tax Rate 6%
Estate Tax Due 82,684.50
 Problem 2
Conjugal property:
200,000.00 House and lot 800,000.00
35,000.00 Savings deposit 90,000.00
800,000.00 Fishpond 200,000.00
26,500.00 Lotto winnings 5,000,000.00
250,000.00 6,090,000.00
15,000.00
50,000.00 Exclusive property (Concepcion):
875,000.00 Car 250,000.00
3,500.00 Yamaha wonderbike 50,000.00
2,255,000.00 Riceland 200,000.00
Inheritance 63,000.00
563,000.00

350,000.00 Joanne
12,000.00 Jeepney 160,000.00
200,000.00 Income 8,000.00
3,000.00 168,000.00
565,000.00

Problem 6
Gross estate -
Deductions -
Net estate 500,000.00
Share of surviving spouse - 100,000.00
Taxable net estate 400,000.00
Tax rate 6%
Estate tax due 24,000.00
Foreign tax credit - 10,000.00
Estate tax payable 14,000.00

Problem 7
Citizen/Resident Alien Nonresident Alien
Gross estate - Gross estate
Deductions - Deductions
Net estate 800,000.00 Net estate
Share of surviving spouse - Share of surviving spouse
Taxable net estate 800,000.00 Taxable net estate
Tax rate 6% Tax rate
Estate tax due 48,000.00 Estate tax due/payable
Foreign tax credit - 21,000.00
Estate tax payable 27,000.00

Problem 8
Gross estate (both exclusive and community/conjugal property)
Car 500,000.00
Jewelry 120,000.00
Land and building 3,000,000.00
Family home 850,000.00
Shares of stock 200,000.00
Personal property 75,000.00 4,745,000.00

Deductions
Ordinary deductions
Funeral 115,600.00
Judicial 47,800.00
Mortgage payable 50,000.00
Income taxes 24,700.00 238,100.00

Special deductions
Family home 425,000.00
Standard deduction 5,000,000.00 5,425,000.00

Net estate - 918,100.00

Share of surviving spouse - 910,000.00

Taxable net estate - 1,828,100.00

Tax rate 6%
Estate tax income - 109,686.00
 -
-
250,000.00
-
250,000.00
6%
15,000.00