INTRODUCTION TO TRANSFER TAXATION

Transfers refer to any transmission of property from one person to another.

A person may be a natural person such as individuals or a juridical person

created by law such as corporation, partnership or joint ventures.

Types of transfers:
1. Bilateral transfers
2. Unilateral transfers
3. Complex transfers

BILATERAL TRANSFERS

Bilateral transfers involve transmission of property for a consideration. They are

referred to as onerous transactions or exchanges.
Examples:
1. Sale - exchange of property for money
2. Barter-exchange of property for another property

Taxation Rules on Sales or Barter                                    If the seller is 

                                                                                 Business             not Business
Consideration                                   1000              business tax                   no tax
Less: Cost of property given            (600)
Realized gain                                    400                income tax                  income tax

UNILATERAL TRANSFERS

Unilateral transfers involve the transmission of property by a person without

consideration. They are commonly referred to as gratuitous transactions or simply,
transfers.

The right or privilege to transfer properties is subject to "transfer taxes".

Types of Unilateral Transfers

1. Donation - "Donation" is the gratuitous transfer of property from a living donor to a
donee. Since it is made between living persons, it is called donation inter vivos.

2. Succession "Succession" is the gratuitous transfer of the properties of the

deceased
person upon his death to his heirs.

When a person dies, his legal identity including proprietary rights are extinguished.
His properties will be gratuitously transferred to his successors either by operation
of law or by virtue of a written will.
Succession is a donation of all the properties of the decedent caused by his death.
Hence, it is called donation mortis causa.

Comparison between inter-vivos and mortis causa

                                       Inter-vivos                          Mortis causa
Transferor                       living donor                                  decedent
Nature                             voluntary                                    involuntary
Reason                           gratuity                                           death
Scope of the transfer: Only properties selected by donor; all properties of decedent
Property given                 gift                                                  estate
Transferee                    donee                                               heir
Transfer tax                 Donors tax                                      Estate tax

COMPLEX TRANSFERS

Complex transfers are transfers for less than full and adequate consideration.These
are sales made at prices which are significantly lower than the fair value of the
property sold

There is no fixed quantitative rule on what constitutes an adequate

consideration. The determination of whether or not a consideration is adequate
requires consideration of the facts and the circumstance surrounding the sale.

The adequacy of the price is influenced by the liquidity or the availability of willing
buyers of the concerned property. Hence, a discount of 20% to highly saleable goods
like gold would be construed as gift due to its relative liquidity while this may not be
the case in selling big real estates,

Tax rules on transfers for adequate consideration

Transfers for adequate consideration are deemed pure exchanges and are subject to
income tax, not to transfer tax.

Transfer for less than adequate and full consideration 

Transfers for less than full and adequate consideration are split into its components:
transfer element and exchange element. The transfer element is subject to transfer
tax while the realized gain on the exchange element is subject to income tax.

Illustration
Assume a property with a fair value of P50,000 and tax basis of P10,000 is sold for
merely P30,000. 

Fair value                                                                 50,000

Gratuity (indirect donation)                                      20,000       subject to  transfer tax
Consideration or selling price                                  30,000
Less: Cost or tax basis                                           10,000
Realized gain                                                           20,000       subject to income tax

The transfer element is generally considered as an inter-vivos donation, but it

is a donation mortis-causa if:
a. the sale is made in contemplation of the death of the seller, or
b. if title to the property is agreed to be transferred upon the death of the seller.

RATIONALE OF TRANSFER TAXATION

1. Tax evasion or minimization theory
2  Tax Recoupment theory
3. Benefit received theory
4. State partnership theory
5. Wealth redistribution theory
6. Ability to pay theory
The Tax Evasion or Minimization Theory

Exchanges may be intentionally priced to evade or minimize income taxes. The

indirect donation in an exchange is actually a lost gain which will evade taxation. To
plug this tax loophole, the government subjects the gratuity to tax. However, it is not
taxed in the absence of donative intent on the part of
the seller such as when the sale is made in the normal course of business.

The Tax Recoupment Theory

Even without a deliberate intent to evade income tax, transfers have a natural
effect of decreasing future income tax collections of the government.

Illustration
Alison has P10,000,000 properties which earn 10% or P1,000,000 yearly income.
Desiring to make his 5 children become financially independent, he divided his entire
properties to them. Each child received P2,000,000 properties. Each child earns
roughly P200,000 on the donated properties.

Note that the split of the properties and the spread of the income to several taxpayers
will result in lesser tax collection to the government because of the progressive tax
imposed upon individuals. The same effect would result if Mr. Alison transfers his
property to his children through succession.

To recoup on future losses in income taxes caused by transfers, the government

taxes the transfer of the properties.

The Benefit Received Theory

When a person transfers property by donation or succession, the government is a
party in the orderly transfer of the property to the donee or heir. This is made
possible by government laws which enforce or effectuate donation and succession.

The transferor is actually exercising a privilege to transfer his property under

government security of an effective and orderly transmission under its laws which
define and effect donation or succession. Without these laws, the transfer could not
have been conveniently possible.

Exercising this special privilege to transfer property either inter vivos ormortis causa
is a benefit to the transferor. In accordance with the benefit received theory, the
transfer should be taxed.

The benefit received theory is the most dominant rationalization of transfer taxation.

The State Partnership Theory

The state ensures a civilized and orderly society where commercial undertaking and
wealth accumulation flourish. The government therefore is an indirect partner behind
all forms of wealth accumulation by any person within the state. Thus, when a person
transfers part or the whole of his wealth, the government should take its fair share by
taxing the transfer of the wealth to other persons.

Wealth Redistribution Theory

Equitable distribution of wealth is widely accepted as an element of social progress
and stability. Societies with high inequities in wealth distribution are normally
associated with high social unrest, lawlessness, insurgencies, wars, and chaos.

Thus, governments strive toward equitable wealth distribution as a basic policy.

Taxation is a common tool in redistributing wealth to society. When one transfers his
wealth, the transfer should be taxed so that part of the wealth will be redistributed to
benefit society.

Ability to Pay Theory

No one could gratuitously give what he could not afford. The ability to transfer
property is an indication of an ability to pay tax. Hence, the transfer is subject to tax.

COMPARISON OF THE TWO TYPES OF TRANSFER TAX

                                                      Donor's tax               Estate tax
Subject transfer                                Inter-vivos                Mortis causa
Nature                                             Annual tax                one time
Taxpayer                                           Donor                       decedent
Who actually pay                    The donor himself.        Executor, administrator or heirs
                                                                                             in behalf of the decedent.

NATURE OF TRANSFER TAXES

1. Privilege tax
Transfer tax is as a form of privilege tax rather than a form of penalty tax. It is
imposed because the transferor (donor or decedent) is exercising a privilege in the
form of assistance rendered by the government in effecting the transfer of properties
by way of donation or succession.
2. Ad valorem tax
The amount of transfer tax is dependent on the value of the properties transferred.
Thus, valuation of the property transferred is needed in order to determine the
amount of the tax.
3. Proportional tax
Transfer taxes under the TRAIN law are imposed at flat 6% of the net estate or gift.
4. National tax
Transfer taxes are levied by the national government. Local government  units
(LGUS)
 are legally precluded from imposing the same.
5. Direct tax
Transfer taxes cannot be shifted. The transferor-donor or transferor- decedent is the
one subject to tax.
6. Fiscal tax
Transfer taxes are levied to raise money for the support of the government.

CLASSIFICATION OF TRANSFER TAXPAYERS AND THEIR EXTENT OF

TAXATION
1. Residents or Citizens - such as:
a. Resident citizens
b. Resident aliens
C. Non-resident citizens
These are taxable on global transfers of property.
2. Non-resident Aliens
These are taxable on Philippine transfers of property.
The citizenship of juridical persons is determined by the incorporation tests. Juridical
persons that are organized in the Philippines are considered Philippine citizens.
Those organized abroad are considered aliens.

In donor's taxation, the term resident citizen or alien includes domestic or resident
foreign corporation. Obviously, corporations are not subject to estate taxation.

SITUS OF TRANSFER

Transfers occur in the location of the property.

Properties are transferred mortis causa in the place where they are located at the
point of death. They are not transferred at the place where the decedent died.

Likewise, properties are transferred inter-vivos in the place where they are
located at the date of donation. They are not transferred at the place where the
donor executed the deed of donation.

Examples:
1. A resident alien who has P10M properties in the Philippines and P40M properties
in Japan died in an airplane crash in Malaysia. 
The P10M properties is deemed transferred mortis causa in the Philippines while the
P40M properties is also deemed transferred mortis causa in Japan.

2. While in Korea, a non-resident Filipino donated his car in Japan worth P5,000,000
to his American best friend.
The P5M car is deemed transferred inter-vivos in Japan.

GENERAL RULE IN TRANSFER TAXATION

Taxpayers                     Inter-vivos                        Mortis causa

Resident or citizens     Global donation                 Global estate
Non-resident aliens    Philippine donation              Philippine estate

Global donation means properties donated wherever situated across the globe.
Estate means properties of the decedent at the point of death. Global estate means
properties of the decedent wherever situated across the globe at the point of death.

Illustration 1
Mr. Mario, an American residing in the Philippines, donated a car in Mexico to a
friend and a motorbike in the Philippines to his brother in America.

Since the taxpayer is a resident, both the donation of a car abroad and the donation
of a motorbike in the Philippines are subject to transfer tax. Since the donor is living,
the transfers are donations inter-vivos subject to donor's tax.

Illustration 2
Juan, a non-resident Filipino citizen, died leaving a building in the United States and
an agricultural land in the Philippines for his heirs.
Since the taxpayer is a citizen, the transfer mortis causa of the building in the US and
the agricultural land in the Philippines is subject to Philippine estate tax.

Illustration 3
Mr. Kounoman, a Japanese citizen residing in Japan, donated a parcel of land in
Japan to a resident Filipino friend. He also donated his investment in the shares of
stocks of a Philippine corporation to his Japanese sister.

Since the donor is neither a Philippine resident nor a citizen, only the donation of
domestic shares of stock in the Philippines is subject to transfer tax. Also, since the
donor is living at the date of donation, the transfer is a donation inter-vivos subject to
donor's tax.

Illustration 4
Mr. Ti Wong, a Chinese citizen residing in Hong Kong, died leaving a building in
Hong Kong and a car in the Philippines.
The donor is neither a resident nor a citizen. Only the car in the Philippines is subject
to transfer tax. Since the transfer is effected by death, it is a donation mortis causa
subject to estate tax.

PROPERTIES LOCATED IN THE PHILIPPINES

The following properties are considered located in the Philippines:

1. Interest in a domestic business
a. Shares, obligations, or bonds issued by any corporation or sociedad anonima
organized or constituted in the Philippines in accordance with its laws
b. Shares or rights in any partnership, business or industry established in the
Philippines
2. Foreign securities, under certain conditions:
a. Shares, obligations, or bonds issued by any foreign corporation 85% of the
business of which is located in the Philippines
b. Shares, obligations, or bonds issued by any foreign corporation if such shares,
obligations, or bonds have acquired business situs in the Philippines
3. Franchise exercisable in the Philippines
4. Any personal property, whether tangible or intangible, located in the Philippines

RECIPROCITY RULE ON NON-RESIDENT ALIENS

The intangible personal properties of non-resident aliens are exempt from Philippine
transfer taxes provided that the country in which such alien is a citizen also exempts
the intangible personal properties of Filipino non- residents therein from transfer
taxes.
Examples of intangible properties:
1. Financial assets
a. Cash
b. Receivables or credit
C. Investment in bonds
d. Shares of stock in a corporation
e. Interest in a partnership
2. Accounting intangible assets
a. Patent
b. Franchise
c. Leasehold right
d. Copyright
e. Trademark
It must be pointed out that bills and coins (i.e., cash) are mere representation of
purchasing power. They are intangibles rather than tangible assets.

Illustration 1
Mr. Shino, a Japanese citizen, donated the following properties in thePhilippines:
1. Car
2. Cash in bank
3. Shares of stocks of a domestic corporation
Under Japanese laws, non-resident Filipinos are exempt on transfers of intangible
properties in Japan.
Since the reciprocity exemption applies, Mr. Shino is subject to donor's tax only on
the donation of the car. The donation of the intangible personal properties such as
cash and shares of stocks are exempt.

Illustration 2
leaving those properties in the Philippines. The Japanese government do not tax
Assuming the same data in the preceding problem, except that Mr. Shino died
intangible properties of non-resident Filipinos thereon to estate tax

Only the tangible property-car would be subject to estate tax.

Illustration 3
Mr. Park, a Korean citizen residing in the Philippines, died leaving P5M cash, P3M
interest in a business and a P10M condo unit in the Philippines. Under Korean laws,
Filipino non-residents therein are exempt from transfer taxation.

All of these will be subject to estate tax since reciprocity exemption applies only to
non-resident aliens to the exclusion of resident aliens.

CLASSIFYING DONATION AS INTER-VIVOS OR MORTIS CAUSA

The timing of the gratuitous transfer of ownership or legal title over property to
another determines the classification of the transfer.

If gratuitous transfer of ownership occurs           Type of transfer

>During the lifetime of the transferor                                     inter vivos
> Upon death of the decedent                                              Mortis causa

If ownership over property is voluntarily transferred by the owner during his lifetime,
this is donation inter-vivos. If the owner retained ownership until the moment of his
death, death will transfer it his successors in interest. This transfer is donation mortis
causa.

Illustration
Don Juanico has a hotel and a commercial building as his only properties. He
promised to donate the hotel to son, Juan and the building to son, Juanito. He was
able to donate the hotel to Juan when the same was worth P40M. While finalizing the
deed of donation of the building for Juanito, Don Juanico met an
accident and died.

The hotel and the building has fair value of P45M and P50 at the date of death of
Don Juanico. A year after his death, the properties have fair values of P48M and
P52M, respectively.

The transfer of the hotel is a donation inter-vivos. The same shall be valued at P40M
and shall be subject to donor's tax. Since Don Juanico still owns the commercial
building upon his death, the same is a transfer mortis causa. The same shall be
valued at P50M and shall be subject to estate tax.

Note:
1. Donation inter-vivos are valued at the date of donation.
2. Donation mortis causa are valued at the date of death of the decedent.

Exceptional rules on transfers        inter vivos                      mortis causa

1. Transfer in contemplation of        X                     /
2. Transfer intended to take effect at death     X                                           /
3. Incomplete transfers                                    / /

TRANSFER IN CONTEMPLATION OF DEATH

A donation that is inspired or motivated by the thought of death of the decedent is
donation mortis causa. If the donation is inspired by motives associated with life, it is
a donation inter-vivos.

The motive of donation is the determining factor

The motive of an inter-vivos transfer is very important in determining whether it is
actually an inter-vi transfer or a mortis causa transfer. The donor's motive is
established out of the wordings of the deed of donation prepared by the donor to
effect the donation.

Thought of death
The presence of express wordings in the deed of donation which indubitably manifest
that the donation is inspired by the decedent's thought of death will qualify a donation
as a donation mortis causa.

Illustration
On his death bed, Don Pedro made a written donation saying "Death is imminent
upon me. I would like to ensure that Pablo will have my sports car as his legacy. For
this, I am donating my car to him."

Though the donation is made during the lifetime of Don Pedro, the donation is
inspired by the thought of death. This is a transfer mortis causa subject to estate tax
upon Don Pedro's death.

The evaluation of the decedent's motive is done in particular when the decedent
made a donation just several months prior to his death and had a severe illness,
suffering from a critical injury, or of too advanced age.

Transfers in contemplation of death actually pass ownership over the property to the
transferee at the date of donation but the same is taxable to estate tax not to donor's
tax because it is a donation mortis causa.

Motives associated with life:

The following motives precludes a transfer from being classified as one

incontemplation of death:
2. To relieve the donor of the burden of management of the property
1. To rewards services rendered
3. To save on income tax
4. To see children financially independent
5. To see children enjoy the property while the decedent still lives
6. To settle family disputes

Illustration
Rhad distributed a significant part of his properties worth P500M to his children. In
the deed of donation, he cited excessive income tax and his intent to save on income
tax as reasons of his donation.

The donation is a donation inter-vivos subject to donor's tax.

TRANSFERS INTENDED TO TAKE EFFECT UPON DEATH

A donation that is made on the decedent's last will and testament is a donation mortis
causa. The 'last will and testament' is a document expressing the decedent's desire
on how his properties will be distributed
after his death.

Similarly, a donation that is made during the lifetime of the decedent with a stipulation
that ownership shall transfer upon his death, the same is a donation mortis causa.

Illustration
During his lifetime, Don Juan transferred a property to his favorite granddaughter,
Karen. Don Juan allowed Karen to obtain possession of the property but under
condition that ownership will not transfer until his death.

The transfer of property during the lifetime of the donor is not intended to take effect
in ownership immediately but at the point of death. The transfer is a donation mortis
causa subject to estate tax.

INCOMPLETE TRANSFERS
Incomplete transfers involve the transmission or delivery of properties from one
person to another, but ownership is not transferred at the point of delivery. The actual
transfer of ownership will take effect in the future upon the happening of certain
future events or satisfaction of certain conditions.

Initially incomplete transfers are not  subject  to transfer tax upon delivery of the
property. They are subject to transfer yax in the future when actual transfer occurs. 

TYPES OF INCOMPLETE TRANSFER

1. Conditional transfers
2. Revocable transfer
3. Transfers with reservation of title to property until death

How incomplete transfers completed

1. conditional transfers are completed intervivos upon happening of the
following during lifetime of the donor
> fulfillment of the condition by the transferee
> waiver of the condition by the transferor

2. Revocable transfers are completed intervivos upon

>waiver by the transferor to exercise his right of revocation

> the lapse  of his reserved right to revoke

3. Transfer with reservation of title to property until the death are

 completed by the death of decedent

Condtional transfers and revocable transfers become donation mortis causa

when the transferis pre terminated by the death of the decedent. They will be
included in the properties of the decedent subject to Estate tax.

TIMING OF TAXATION OF INCOMPLETE TRANSFERS

Revocable and conditional transfers that are completed during lifetime of the
transferor constitute donations intervivos subject to donors tax at the fair
value of the property at the date of their completion or perfection.
Revocable and Conditional transfers that are preterminated by the death of the
transferor shall be subject to estate tax at the point of death of the transferor.

Illustration 1

On June1, 2019, Don Lucio donated luxury car with value of 4M to his son Boy,
under a condition that Boy must be topnotcher in the Ocober 2019 CPA board
exam. To motivate Boy the car was delivered to him on June 1, 2019.

>the transfer shall not be subject to donors tax because of thecondition that
need be fulfilled.[despite the actual delivery]
> If Boy topped the board exam, condition was perfected and donors tax shall
be imposed on the date of completion
> if transferee failed to topped the board exam, there will be no donors tax, 
> if transferor or donor waived the condition donation will nevertheless be
perfected at that time and will be taxable to donor's tax at its fair value at that time.

Assuming Don Lucio died before the exams, car would be transferred mortis-causa
as part of his estate and would be subject to estate tax at its fair value at the date
of death.

Illustration 2
On February 14, 2019, Mark transferred a phone to Goldemaire but subject to
revocation if Mark so pleases.

Although there is an actual physical transfer of property on February 14, 2019, the
same cannot be subject to donor's tax since there is no transfer of ownership at that
date.

> Assuming Mark waived his right to revoke, the donation shall be subject to
donor's tax at its fair value at the time of waiver. 
> If Mark revoked the property, there is no donation to speak of.
> Assuming Mark died without revoking the phone, the same would be transferred
mortis-causa and would be included part of his estate subject to estate tax at its fair
value at the point of death.

Complex Incomplete Transfers

Incomplete transfers are sometimes made for less than full and adequate
consideration. Similar to complex transfers, the gratuity component of the complex
transfers is subject to the appropriate type of transfer tax.
Test of Taxability of Complex Incomplete Transfers
The following must be established before a complex incomplete is taxable:
1. The incomplete transfer must have been paid for less than full and adequate
consideration at the date of delivery of the property.
2. At the completion of the transfer, the property must not have decrease in value
below the consideration paid.

Valuation of complex incomplete transfers

Mortis causa                                                                         
Fair value at death less consideration upon transfer
Inter-vivos
Fair value at completion or perfection of donation less consideration upon transfer
   

Example:                     At transfer                        Fair value               Donation is

Type of Donation:   selling     Fair value             at death                  computed as
Inter-vivos                 4,000        10,000                       15,000                    10K-4K     
Mortis causa            4,000         10,000                      15K                         15K-4K

Illustration 1
On June 1, 2017, Mr. D transferred his car worth P1,000,000 to E but for a minimal
consideration of P200,000 only. The transfer shall be revocable by D in 5 years.
Case 1: Waiver before death
On July 3, 2019, D intimated to E that he was waiving his right of revocation. The fair
value of the car was P800,000 on that date.

Since D was still living upon the perfection of the transfer, the transfer is a donation
inter-vivos. It shall be valued at: P800,000 less P200,000. Hence, P600,000 shall be
subject to donor's tax.
Case 2: Death without revocation Assume instead that Mr. D died on July 3, 2019
without waiving his right to revoke the transfer. The fair value of the property was P
900,000 at that time.

Since the revocable transfer is pre-terminated by death, it is a donation mortis causa.

It shall be valued at (P900,000 less P200,000). Hence, P 700,000 shall be subject to
estate tax.

Illustration 2
Lordknight has a rare Egyptian artifact which has a fair value of P2,000,000. He gave
the artificact to Noventa for a consideration of P1,950,000 but revocable if Noventa
did not graduate as cum laude. Noventa subsequently graduated cum laude when
the artifact was worth P3,000,000.

The transfer was paid for an adequate consideration considering that the selling price
approximates the fair value at the date of delivery. The transfer is a bona fide sale
which will not be subject to transfer tax even if the fair value of the property
appreciated at the date of completion of the donation.

Illustration 3
Soren sold a gold bullion with a fair value of P2,500,000 to Leomilo at a price of
P1,800,000 but revocable within one year. The one-year period lapsed when the gold
bullion had a fair value of P1,700,000.

The transfer is insufficient thus subject to donor's tax upon expiration of the one- year
period since Soren is living. Since the fair value upon completion fell below
P1,800,000, there is no gratuity subject to donor's tax.

Assuming Soren died before the one-year period when the gold bullion was worth
P2,300,000. The donation mortis causa subject to estate tax shall be P500,000
(P2,300,000 P1,800,000). 

Assuming the value fell below the P1,800,000 considerations upon Soren's death,
there is no gratuity subject to estate tax

NON-TAXABLE TRANSFERS
There are transfers of properties which are not actually donations and
hence, not subject to transfer taxes, such as:
1. Void transfers
2. Quasi-transfers

Void Transfers
Void transfers are those that are prohibited by law or those that do not conform to
legal requirements for their validity. Void transfers do not transfer ownership over
property and are therefore not subject to transfer
tax
Examples of void transfers:
1. Donation of properties not owned by the donor
2. Donation between spouses
3. Donations which do not manifest all essential requisites to validity such as
donations refused by the donee
4. Donations that do not conform to formal requirements such as oral donation of real
properties

Illustration 1
Tired of feeding Zeus' derby roosters, Raymund donated them to Andrix, his
bestfriend "tupada" master.

Since Raymund does not have ownership over the thing donated, the donation is
void. There is no valid donation to speak of; hence, no donor's tax is imposable.

Illustration 2
In an overnight drinking spree, Zeus orally donated his seven-hectare agricultural
land to Raymund.

Oral donation of real property is legally void because the law requires the execution
of a public instrument. There is no imposable donor's tax since there is no donation
to be taxed.

Quasi-transfers
There transmissions of property which will never involve transfer of ownership. For
the purpose of our discussion, let us refer to these transmissions as "quasi-
transfers." Quasi-transfers are not taxable.
Examples:
1. Transmission of the property by the usufructuary to the owner of the naked title
2. Transmission of the property by a trustee to the real owner
3. Transmission of the property from the first heir to a second heir in accordance with
the desire of a predecessor

Illustration 1

Mr. A died leaving a track of land to C but since C was a minor, A devised in his will
to give B a usufructuary right to use and enjoy the land for 10 years before turning it
over to C. After the lapse of 10 years, B transferred the land to C.

Usufractuary B does not own the land. He was granted only the right to use the same
but not ownership thereto. B's turnover of the land to C, the real owner (i.e. owner of
the naked title), shall not be subject to donor's tax since there is no transfer of
ownership.

Illustration 2
Mr. A died leaving a commercial building as inheritance to C. Since C was a minor, A
appointed his older brother B to be the fiduciary heir to the property to take care of
the same until C becomes 18 years old. When C turned 18 years old, B transferred
the property to C.

The transmission of the property from B, a mere trustee, to C, the real heir, shall not
be subject to donor's tax since there is no transmission of legal ownership over the
property.

If the usufruct in the Illustration 1 and the fiduciary relationship in the Illustration 2 are
pre-terminated by the death of the usufructuary or fiduciary heir, the transfer of the
property to the real owner is likewise not subject to estate tax for the same reason
that there is no transfer of ownership.