ESTATE TAX

* it will accrue at the time of death

*FILING OF RETURN: within a year from the date of death
*TAXPAYER: Estate as a juridical person
PRIMARILY LIABLE: administrator/executor
SECONDARILY LIABLE: any of the heirs

*ESTATE TAX RATE: 6% (train law)

*COMPONENTS OF GROSS ESTATE
a. Tangible, intangible properties at the time of death
b. Decedent’s interest such as dividend income existing
time of death
c. Shares owned issued by foreign corporation,
85% of which is located in the Philippines (W/IN )
Less than 85%, (W/OUT)
d. Transfer in contemplation of death
e. Transfer with retention or reservation of certain rights
f. Revocable Transfer
g. Property passing under GPA (General Power of
Appointment)
 h. Transfer for Insufficient consideration
FV at the date of sale > SP at the time of sale
Cash received (above scenario) - fv at the time of
death = INCLUDED IN THE GROSS ESTATE

i. Proceeds from Life Insurance

EXEMPT; MEET BOTH REQUISITES
1. REVOCABLE
2. BENEFICIARY IS OTHER THAN
EXECUTOR OR ADMINISTRATOR

*EXEMPT/EXCLUDED FROM GROSS ESTATE

a. Exclusive properties of surviving spouse
b. Merger of the usufruct in the owner of the naked title
c. SPA (Special power of appointment)
d. Transmission from fiduciary to fideicomissary.
e. All donated properties as long as;
1. No part of NI inure to the benefit of any individual
2. Not more than 30% of such transfers shall be used for
administration purposes.
f. Under special laws
RESIDENT/ CITIZENS (W/IN & W/OUT)

Gross estate
Less: deductions
1. Ordinary deductions
Casualty losses (incurred w/in a year at the time of death)
Claims against the estate
Claims against Insolvent Person
Unpaid Mortgage
Unpaid taxes
Vanishing deductions

2. Transfer for Public use

3. Special Deduction - 5,000,000

Family Home - max 10,000,000
Amount received by heirs
Share of the surviving spouse (50% of common properties)
NON-RESIDENT ALIEN - (W/IN ONLY)

Gross estate
Less: deductions
1. (W/IN DIVIDED BY WORLD)* Ordinary Deductions
Casualty losses (incurred w/in a year at the time of death)
Claims against the estate
Claims against Insolvent Person
Unpaid Mortgage
Unpaid taxes
Vanishing deductions

2. Transfer for Public use

3. Special Deduction - 500,000

*subject to RECIPROCITY RULES

1. NRA ONLY
2. LIMIT: INTANGIBLE PROPERTIES ONLY
Situs of Properties
1. Real Properties - PLACE OF PROPERTY
2. Intangible Properties (shares)
A. Domestic corporation - ALWAYS W/IN
B. Foreign corporation
*business situs @ 85% (W/IN)
*business situs @ less than 85% (W/OUT)

C. Sale of shares
*Domestic corp - always W/IN
*Foreign Corp- PLACE OF SALE

D. Receivables - PLACE OF DEBTOR

E. Bank deposits - LOCATION: DEPOSITARY BANK
*ABSOLUTE COMMUNITY OF PROPERTY
- Before marriage = Community properties
- During Marriage
*Common fund (acquire) = Community Prop
*Gift/Inherited properties = SILENT; Community
= Expressly exclusive; Exclusive

- The fruit shall follow the source

*Conjugal Properties of Gain

- ALL GAINS/ FRUITS before and during marriage=
Conjugal/common Prop
-All Properties before and during = Exclusive