Illustration 8-9

Bobby died single, leaving properties in the Philippines and abroad,

The following are his data:

Net estate, Philippines P 2,500,000

Net estate, United States 2,000,000
Net estate, Hongkong 3,500,000
U.S. tax paid 150,000
Hongkong tax paid 60,000

REQUIRED: Compute the estate tax due after tax credit.

Net estate, Philippines P2,500,000

Net estate, United States P2,000,000
Net estate, Hongkong 3,000,000 5,500,000
Total net estate 8,000,000
Rate of tax 6%
Estate tax due 480,000
Less: Foreign estate tax paid
U.S. tax paid, P150,000
Limit (20 / 80 x 480,000) 120,000
Credit allowed (lower) 120,000
Hongkong tax paid 60,000
Limit (35 / 80 480,000) 210,000
Credit allowed (lower) 60,000
Total credits, 1st limitation 180,000

2nd limitation (55/80 x 480,000) 330,000

Credit allowed (lower) 180,000
Estate tax payable 300,000