Problem 1

The administrator of a decendent's estate (head of the family) provided the following data:

Property
Domestic shares of 2,000 shares inherited 6 years ago 8,000,000
House and Lot, family home, located in Davao, inherited 2 years ago at a value of 1,500,000 2,000,000

Jewelry items in the Philippines at the time of death 400,000

Jewelry items kept in a vault abroad 200,000
Bank deposit in a Philippine branch of a US bank 5,000,000
Interest from bank deposits after decendent's death 25,000

Expenses and other charges

Funeral Expenses abroad 80,000
Funeral Expenses Philippines 200,000
Judicial expenses abroad 100,000
Judicial expenses, Philippines 50,000
Claims against estate with the notorized debt instrument issued in the Philippines 120,000
Donation to the Philippine government as provided in his will 250,000

Required
A.
Determine the following if the decendent was a Filipino citizen but a resident of Australia

1. Taxable Net Estate

2. Estate Tax Due
B. Determine the following if the decendent was not a Filipino citizen but a resident of Davao
City
1. Taxable Net Estate
2. Estate Tax Due

Required 1: A.
Domestic shares of 2,000 shares inherited 6 years ago 8,000,000
House and Lot, family home, located in Davao, inherited 2 years ago 2,000,000
at a value of 1,500,000
Jewelry items in the Philippines at the time of death 400,000
Jewelry items kept in a vault abroad 200,000
Bank deposit in a Philippine branch of a US bank 5,000,000
Donation to the Philippine government as provided in his will 250,000
GROSS ESTATE P 15,850,000
Less: Operation Deduction
Claims against estate with the notorized debt instrument issued in 120,000
the Philippines
Donation to the Philippine government as provided in his will 250,000
Vanishing Deduction 1,171,987
Net Estate before Special Deduction P 14,308,013
Less: Special Deduction
Standard Deduction 5,000,000
Family Home 2,000,000
TAXABLE NET ESTATE P 7,308,013
× Estate Tax Due 6%
ESTATE TAX DUE P 438,481

Computation for Vanishing Deduction

Initial Value P 1,500,000
1st Deduction －
Initial Basis 1,500,000
2nd Deduction （1,500,000/15,850,000×370,000） 35,016
Final Basis 1,464,984
Multipying by it's vanishing rate 80%
VANISHING DEDUCTION P 1,171,584

Required 2: B.
Domestic shares of 2,000 shares inherited 6 years ago 8,000,000
House and Lot, family home, located in Davao, inherited 2 years ago 2,000,000
at a value of 1,500,000
Jewelry items in the Philippines at the time of death 400,000
Jewelry items kept in a vault abroad 200,000
Bank deposit in a Philippine branch of a US bank 5,000,000
Donation to the Philippine government as provided in his will 250,000
GROSS ESTATE P 15,850,000
Less: Operation Deduction
Claims against estate with the notorized debt instrument issued in 120,000
the Philippines
Donation to the Philippine government as provided in his will 250,000
Vanishing Deduction 1,171,987
Net Estate before Special Deduction P 14,308,013
Less: Special Deduction
Standard Deduction 5,000,000
Family Home 2,000,000
TAXABLE NET ESTATE P 7,308,013
× Estate Tax Due 6%
ESTATE TAX DUE P 438,481

Computation for Vanishing Deduction

Initial Value P 1,500,000
1st Deduction －
Initial Basis 1,500,000
2nd Deduction （1,500,000/15,850,000×370,000） 35,016
Final Basis 1,464,984
Multipying by it's vanishing rate 80%
VANISHING DEDUCTION P 1,171,584
Problem 2
A nonresident alien, married, died on September 2018. He left the following:
Conjugal properties, Philippines, 5,000,000
Exclusive properties, Philippines, 2,000,000
Conjugal properties, USA, 10,000,000
Exclusive properties, USA, 5,000,000

The following deductions were claimed:

Actual funeral expenses, 1,250,000

Judicial expenses, 800,000
Claims against the estate, 1,725,000
Transfer for Public Use, 200,000
Medical expense, 875,000

Included in the Philippines gross estate (conjugal) were the following:

Domestic shares, 500,000

Share in a partnership, 1,000,000
Other tangible personal properties, 3,500,000

The Philippine exclusive properties were all tangible personal properties. These included
a car, which was inherited 3 1⁄2 years before the present decedent’s death, and had a
fair market value of 500,000.

Required

Determine the following:

1. Exclusive Property of the Decedent

2. Community Property
3. Taxable Net Estate
4. Estate Tax Due

EXCLUSIVE PROPERTY OF THE DECENDENT COMMUNITY PROPERTY TOTAL

Exclusive Properties P 2,000,000 P 2,000,000
Conjugal Properties P 5,000,000 5,000,000
GROSS ESTATE P 7,000,000
Less: Ordinary Deduction
LITe 548,864 584,864
Transfer for Public Use 200,000 200,000
Vanishing Deduction 184,318 184,318
NET EXCLUSIVE/COMMUNITY
(a) P 1,615,682 (b) P 4,451,136 6,066,818
BEFORE SPECIAL DEDUCTION
Less: Special Deduction
Standard Deduction 500,000
NET ESTATE P 5,566,818
Share of the surviving spouse (
2,225,568
4,451,136/2 )
NET TAXABLE ESTATE (c) P 3,341,250
Multiplying by tax rate 6%
ESTATE TAX DUE (d) 200,475

LITe= (GE Philippine/ GE World) x Total LITe

Conjugal properties, Philippines 5,000,000
Exclusive properties, Philippines 2,000,000
Conjugal properties, USA 10,000,000
Exclusive properties, USA 5,000,000
World Gross Estate P 22,000,000

LITe:
7,000,000/22,000,000 x 1,725,000
Allowable LIT = 548,863.63 or 548,864

Vanishing Deduction
Initial Value P 500,000
1st Deduction －
Initial Basis P 500,000
2nd Deduction (500,000/7,000,000 x 548,864) 39,205
Final Basis 460,795
Vanishing Rate 40%
VANISHING DEDUCTION P 184,318
PROBLEM 3
A donor made the following donations during 2018:
To Abel, a car worth 800,000
To Jen, a condominium worth 3,000,000 in Macau
To Gore, GJ Company shares (domestic corporation) amounting to 250,000
To Alexa, 100,000 worth of shares of stock of a resident foreign corporation where 90%
of its operation is in the Philippines
To Earl, a building in Singapore valued at 5,000,000 mortgaged for 2,000,000 assumed
by the donee
To Hannah, parcel of land in Isabela, 1,500,000
To Chen, 100,000 bank deposit in BPI
To Kristine, 100,000 bank deposit in Metrobank, US Branch
To Gavrie, 500,000 cash

The donor also made the following transfer of properties within the year:

Consideration Fair Market value at the time

Received of Transfer

Land 1 - QC 2,000,000 3,000,000

Land 2 - Taguig 3,000,000 2,000,000
Land 3 - USA 5,000,000 10,000,000
Car - Manila 800,000 1,000,000

Required

Determine the amount of Gross Gifts subject to donor’s tax assuming the donor is

1. Resident Citizen
2. Nonresident Citizen
3. Resident Alien
4. Nonresident Alien with Reciprocity
5. Nonresident Alien without Reciprocity

NAME RESIDENT CITIZEN NONRESIDENT CITIZEN RESIDENT ALIEN NONRESIDENT ALIEN WITH RECIPROCITY NONRESIDENT ALIEN WITHOUT RECIPROCITY
Abel P 800,000 P 800,000 P 800,000 P 800,000 P 800,000
Jen 3,000,000 3,000,000 3,000,000
Gore 250,000 250,000 250,000 250,000
Alexa 100,000 100,000 100,000 100,000
Earl 5,000,000 5,000,000 5,000,000
Hannah 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000
Chen 100,000 100,000 100,000 100,000
Kristene 100,000 100,000 100,000
Gavrie 500,000 500,000 500,000 500,000
Land 1 -
Land 2 -
Land 3 5,000,000 5,000,000 5,000,000
Car 200,000 200,000 200,000 200,000 200,000
GROSS GIFT P 16,550,000 P 16,550,000 P 15,550,000 P 2,500,000 P 3,450,000

NOTES:

1. The mortgage is being disregard because the only needed is a GROSS GIFT.

2. In the Land 1 there's a insufficient consideration but it was not subjected as Donor's tax but in Capital Gain Tax. Additional, Transferring of insufficient consideration for the Donor's tax purposes
is not taxable if the One's property is being donated will be classified as Capital Asset.

3. Land 2 is considering as bonifide or value sole

4. Lastly, Land 4 is a tranfer that has insufficient consideration but can be subjected to Donor's Tax because the property is not subjected in Capital Gain Tax. A Capital gain tax on real properties
are only applicable only on sale of a real properties that are located in the Philippines.