FORMULA

TYPES OF TRANFER TAX PAYERS

1. RESIDENTS AND CITIZENS- TAXABLE ON GLOBAL TRANSFERS
2. NON RESIDENT ALIENS - TAXABLE ON PHILIPPINE TRANSFERS

General principles
1. The properties of citizens and resident aliens located within or outside the philipines shall be included
2. Properties of non-resident alien loacated in the Philippines shall be included in gross estate
HOWEVER, Intangible properties within the Philippines shall be subject to reciprocity

2 exemption reciprocity
1. The foreign country of the non-resident alien do not impose estate tax
2. The foreign country of the non-resident alien to which he or she is a resident allows the same exempti

Basic Rule
When there is reciprocity – The intangible personal property of non-resident alien situated in the Philippines are not included i
When there is no reciprocity – The intangible personal property of non-resident alien situated in the Philippines are included in

Section 104 of the tax code - Intangible Personal Porperties With Situs in the Philippines
A. Franchise which must be exercised in the Philippines;
B. Shares, obligations or bonds issued by any corporation or sociedad anonima organized and constituted in th
C. Shares, obligations or bonds issued by any foreign corporation 85% of the business of which is located in the
D. Shares, obligations or bonds issued by any foreign corporation if such shares, obligations or bonds have a
E. . Shares or rights in any partnership, business or industry established in the Philippines

SITUS OF TANGIBLE and INTANGIBLE PROPERTIES

PROPERTY Situs
 1. Real Property and Tangible Personal Property Location of the porperty
2. Shares, Franchise, Copyright, and the like Where the Intangible is exerc
3. Receivable Residence of the debtor
4. Bank deposits Location of the depository ba

EXERCISE.1 and 2

* Proceeds of Life insurance taken out by decedent upon his life

Estate, Executor, Adminimistrator as beneficiary whether revocable or irrevocable
Other Person, revocable
* Claims against insolvent person ( Receivable) in full amount
* Amount received by heirs under RA. 4917

EXEMPT TRANSFERS/ EXCLUSION BY LAW

1. Exemptions of certain acquisitions and transmissions

 a. The merger of usufruct in the owner of the naked title;
b. The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to
the fideicommissary;
c. The transmission from the first heir, legatee or donee in favor of another beneficiary in
accordance with the desire of the predecessor; and ( Special power of appointent)
d. All bequest, devises, legacies or transfers to social welfare, cultural and charitable institutio
no part of the net income of which inures to the benefit of any individual: Provided, however,
that not more than 30% of the said bequest, devises, legacies or transfers shall be used by
such institutions for administration purposes
e. Separate property of surviving spouse
f. Proceeds of irrevocable life insurance policy payable to beneficiary other than the estate,

2. Exclusion from gross estate

a. Amount received as war damages;
b. Amount received from US Veterans Administration;
c. Benefits from GSIS and SSS.
d. Proceeds of group insurance taken out by a company for its employees
e. PERA ( Personal Equity Retirement Account)
f. Retirement benefits of employees of private firms from private pension plans approved by B
g. Intangible personal property located in the Philippines of NRA decedent subejct to reciproc
h. bank deposit in the name of decedent on which the 6% estate tax has been withheld and re
upon withdrawal by the heirs
I. In case of death of a health worker, public or private, who contracted COVID-19 in the line
of duty, the National Government, upon submission of the required documents, shall
provide the amount of One Million Pesos (₱1,000,000) to the heirs of the deceased health
worker. Said amount shall not be included in the gross estate of the decedent subject to
estate tax. Provided, the amount is given or to be given from February 1, 2020 and during
the state of national emergency due to COVID-19 as declared by the President.9,

a. The merger of usufruct in the owner of the naked title;

b. The transmission or delivery of the inheritance or legacy by the fiduciary heir or
the fideicommissary;
c. The transmission from the first heir, legatee or donee in favor of another benefic
accordance with the desire of the predecessor; and ( Special power of appointen

A
 A B
first heir

If A dies, Included If B dies, Not part of B's gross estate

 GROSS ESTATE COMPUTATION

PROPERTIES (AND INTEREST) EXISTING AT THE POINT OF DEATH XXXX

TAXABLE TRANSFERS XXXX
EXEMPT TRANSFERS (XXXX)
EXCLUSION BY LAWS (XXX)
GROSS ESTATE XXXX

TAX PAYERS GROSS ESTATE

1. RESIDENT CITIZEN Within Outside
2. NON RESIDENT CITIZEN Within Outside
3. RESIDENT ALIEN Within Outside
4. NON RESIDENT ALIEN Within

he philipines shall be included in gross estate

ded in gross estate

dent allows the same exemption for intangible properties for non-residents

d in the Philippines are not included in the gross estate.

ated in the Philippines are included in the gross estate.

he Philippines

nima organized and constituted in the Philippines in accordance with its law;
he business of which is located in the Philippines;
shares, obligations or bonds have acquired a business situs in the Philippines nes;
 Location of the porperty
Where the Intangible is exercised regardless of where the coresponding certificate is stored
Residence of the debtor
Location of the depository bank

able or irrevocable
he fiduciary heir or legatee to

of another beneficiary in
power of appointent)
ultural and charitable institutions,
ndividual: Provided, however,
r transfers shall be used by

ficiary other than the estate, executor, or administrator

If silent the designation of the ben

Section 11 of Insurance Code
" The insured should have the righ
in the policy unless he has express

e pension plans approved by BIR

A decedent subejct to reciprocity
e tax has been withheld and remitted by the bank to the BIR

tracted COVID-19 in the line

ired documents, shall
eirs of the deceased health
the decedent subject to 2. The decedent took an insurance
bruary 1, 2020 and during 3. the decedent took an insurance
y the President.9, estate as beneficiary
4. the decedent took an insurance
5. The decedent took an insurance

egacy by the fiduciary heir or legatee to

nee in favor of another beneficiary in

( Special power of appointent)

C
 C
Second heir

B's gross estate

Guide:
1. FMV at the time of transfer Less Consideration Received - Determine if the transfer is for insufficient consideration
2. FMV at the time of death Less Consideration Recaived - Determine the amount to be included in the Gross estate

FAIR MARKET AT THE TIME OF TRANFER Insuffient Inclusion in the Gross Estate
FMV at the time of Transfer 5,000,000
FMV at the time of Death 6,000,000
Consideration Received Not 5,000,000 0

FMV at the time of Transfer 5,000,000

FMV at the time of Death 6,000,000
Consideration Received Not 6,000,000 0

FMV at the time of Transfer 5,000,000

FMV at the time of Death 6,000,000
Consideration Received Not 7,000,000 0

FMV at the time of Transfer 5,000,000

FMV at the time of Death 6,000,000
Consideration Received Insufficient 2,000,000 4Million

FMV at the time of Transfer 5,000,000

FMV at the time of Death 6,000,000
Consideration Received Insufficient 0 60,000,000
 BENEFICIARY DESIGNATION GROSS ESTATE
ESTATE R/I I Included
EXECUTOR R/I I Included
ADMINISTRATOR R/I I Included
3RD Party R I Included
3RD Party I E Excluded

If silent the designation of the beneficiary is revocable.

Section 11 of Insurance Code
" The insured should have the right to change the beneficiary he designated
in the policy unless he has expressly waived this right in said policy"

DETERMINE THE AMOUNT TO BE INCLUDED IN THE GROSS ESTATE

2. The decedent took an insurance on his life for 20 million and designated his estate as the revocable beneficiary
3. the decedent took an insurance for his life for 5 million and irrevocably designated the admisnitrator of his
estate as beneficiary
4. the decedent took an insurance on his life for 10 million and designated his son as benefiary
5. The decedent took an insurance on his life for 10 million and designated his daughter as irrivocable beneficiary
nsufficient consideration
ded in the Gross estate

nclusion in the Gross Estate

gross estate
included
incuded

inlcuded
excluded
Determine the 1) Situs 2) Whether or not the porperty is included in the decedent's gross estate

ITEMS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Determine the 1) Situs 2) Whether or not the porperty is included in the decedent's gross estate

Tangible
PROPERTIES Intangible SITUS
Parcel of Land-Pangasinan Tangible Within
Parcel of Land- Singapore Tangible Outside
House and Lot- Laguna Tangible Within
Rest House-Batangas Tangible Within
Reshouse- Palawan Tangible Within
Rest House-Taiwan Tangible Outside
Cars-Philippines Tangible within
Cars- Malaysia Tangible Outside
BPI-Deposit- Philippin Branch Intangible Within
BPI-Deposit- US Branch Intangible Outside
ABC bank ( Foreign Bank) - Phlippine Branch Intangible Within
XYZ bank ( Foreign Bank) - Dubai Branch Intangible Outside
Receivables- debtor from Pangasinan Intangible Within
Receivables- debtor from Singapore Intangible Outside
Shares of stocks of domestic corporations. The certificates are stored in Dagupan Intangible Within
Shares of stocks of domestic corporations. The certificates are stored in Singapore Intangible Within
Shares of stocks of foreign corporations. The certificates are stored in Laguna Intangible Outside
Shares of stocks of foreign corporations. The certificates are stored in Singapore Intangible Outside
Shares of stocks of foreign coportion 90% of its operations is in the Philippines Intangible Within
Shares of stocks of foreign coportion 80% of its operations is in the Philippines Intangible Outside
Shares of stocks of foreign corporations which acquired business situs in the Philippines Intangible Within
Patents and copyrights exercised in the Philippines Intangible Within
Patents and copyrights exercised in the Abroad Intangible Outside
 COMPOSITION OF GROSS ESTATE
NRA
Citizen or Resident With Reciprocity Without Reciprocity
Included Inlcuded Included Inlcuded
Included Inlcuded Not Inlcuded Not Inlcuded
Included Inlcuded Included Inlcuded
Included Inlcuded Included Inlcuded
Included Inlcuded Included Inlcuded
Included Inlcuded Not Inlcuded Not Inlcuded
Included Inlcuded Included Inlcuded
Included Inlcuded Not Inlcuded Not Inlcuded
Included Inlcuded Not Included Include
Included Inlcuded Not Inlcued Not Inlcued
Included Inlcuded Not Included Include
Included Inlcuded Not Inlcued Not Inlcued
Included Inlcuded Not Inlcued Include
Included Inlcuded Not Inlcued Not Inlcued
Included Inlcuded Not Inlcued Include
Included Inlcuded Not Inlcued Include
Included Inlcuded Not Inlcued Not Inlcued
Included Inlcuded Not Inlcued Not Inlcued
Included Inlcuded Not Inlcued Included
Included Inlcuded Not Inlcued Not Inlcued
Included Inlcuded Not Inlcued Included
Included Inlcuded Not Inlcued Included
Included Inlcuded Not Inlcued Not Inlcued
1. Daniel Bernardo a ciizen of Spain died. He left the following properties

House and lot- Hongkong, inherited before marriage

Car, acquired during marriage in Cebu
Shares of stocks issued by a foreign coporation, 20% of its operations
is in the Philippines
Bank Deposit with PNB Branch in New York representing income
earned during marriage
Shares of stocks issued by PLDT group of companies, a corporation
organized under Philippine laws
5-year 12% promissory note, received 2 years ago. The debtor
is a resident of Pangasinan

How much is the gross estate?

1. Assume there is no reciprocity, how much is the gross estate?
2. Assume there is reciprocity, how much is the gross estate?
3. Assume Daniel Bernardo is a resident alien, how much is the gross estate?

2. Ms. Kathryn Padilla an Italian citizen, donated the following properties in the Philippines
1. Car
2. Cash in bank
3. Shares of stocks of domestic corporation

Under the Italian laws, non-resident Filipinos are exempt on tranfers of intangible properties in Italy.
1. How much of the properties is subject to transfer tax? 1,000,000

3. Ms. Andrea, an american citizen residing in the Philipines, died leaving

Cash 1,000,000
Interest in business, 3,000,000
Shares from a foreign corporation, 30% of operations
is in the Philippines 4,000,000
Condo unit in the Philippines 10,000,000
1. How much is subject to estate tax? 18,000,000
ng properties NRA
SITUS Gross estate
15,000,000 tangible outside 0
1,500,000 tangible within 1,500,000 1,500,000
% of its operations
250,000 intangible outsside 0
nting income
500,000 intangible outside 0
s, a corporation w/out R W/ R
500,000 intangible within 500,000 0
The debtor w/out R W/ R
500,000 intangible within principal 500,000 0
interest 120,000 0
Total 2,620,000 1,500,000
2,620,000
1,500,000
the gross estate? 18,370,000

the Philippines NRA

1,000,000 Tangible inlcued
3,000,000 intangible Not inlcued
5,000,000 intangngible Not inlcued

ngible properties in Italy.

RESIDENT ALIEN
RA ( Globally)

15000000 15,000,000
1,500,000 1,500,000

250000 250,000

500000 500,000

500000 500,000

500,000 500,000
120,000 120,000
18,370,000 18,370,000
VALUATION OF GROSS ESTATE

What will be used as basis in the valuation of property?

TSHE- PSHE- APPRAISAL SURPLUS/ OUSTANDING S

OR
TSHE- APPRAISAL SURPLUS/OUSTANDING SHARE =

PROBLEM 1
Daniel Brillantes is non-resident Chinese Citizen. He died testate and left the following properties

Car, Philippines ( received as donation 2 years before his death, FMV, date of donation P1,500,000)
Car, Shanghai, China
Bonds, Philippines
Shares of stock, Shanghai China
House and lot, China ( Mortgaged for P200,000)
Cash deposit, BDO-Samplaoc, Manila
Other tangible personal properties, Manila
Franchise exercised in the Philippines
Shares of stock issued by a foreign corporation

His cousin, Andrea, was assigned as the executor of his last will and testament. She presented you the list of expens
Actual Funeral expenses ( Defrayed by relatives) 100,000
Judicial Expenses ( Extra judicial settlement) 300,000
Loss of certain tnagible personal properties 250,000
Claims against the estate 100,000
Unpaid taxes, accrued after death 150,000
Claims against insolvent person 100,000
Transfers for public use 100,000
Medical expenses 600,000

How much is the gross estate?

a) 4,800,000
b) 6,300,000
c) 11,1000,0000
d) None of the above

Note: Under TRAIN LAW, if the decedent died on or after January 1, 2018 the following are no longer deductible:
1. FUNERAL EXPENSES
2. JUDICIAL EXPENSES
3. MEDICAL EXPENSES

PROBLEM 2
Jin died leaving the following properties
Value as of August 30,2020

Land Located in Canada 2,013,000

Shares of a domestic corporation, 90% of operations
are outside of the PH 580,000
Shares of foreign corporation, 90% of operations are
within the PH 446,800
Revocable donation of car in Makati, not yet revoked;
Jin is the donor 335,000
Revocable donation of books in Cambodia, right of revocation
waived during lifetime of transferor Antonio 202,400
Cash in foreign bank 1,244,000
Jin died on June 30, 2020. During the month of August, charges to the estate amounted to P334,000, were paid for
payment were taken from cash in bank as enumerated above. Increase in the value of the land amounted to P255,0

If Jin is a resident citizen, how much is the gross estate?

a. 4,362,800
b. 4,697,800
c. 4,539,800
d. 4,900,200

PROBLEM 3
The citizen decedent is unmarried head of the family with the following data died on March 1, 2018:
Real and personal properties (including P1,500,000 bank deposit, P500,000 of which was withdrawn
and subjected to 6% withholding tax)
Family home
Ordinary deductions (including P100,000 funeral expenses and P200,000 judicial expenses)
Medical expenses

How much is the gross estate?

a. 25,000,000
b. 22,500,000
c. 25,300,000
d. 23,000,000

PROBLEM 4
A non-resident alien decedent, single, died on January 1, 2018 left the following properties:
Car, Manila (inherited 4 years before he died, FMV, date of inheritance was P1,700,000) P
Car, USA
Shares of stock, USA
Shares of stock, Manila
House and lot, USA
Bank deposit, PNB-Manila
Other tangible personal properties, Manila
The administrator claimed the following deductions:
Actual funeral expenses
Judicial expenses
Loss of certain tangible personal properties
Claims against the estate
Unpaid taxes, accrued before death
Claims against insolvent person
Transfer for public use
Medical expenses

how much is the gross estate?

a. 3,810,000
b. 3,930,000
c. 1,630,000
d. None of the above
PROBLEM 5
A decedent left the following properties:

If the decedent is a non-resident citizen, his gross estate is

a. P3,650,000
b. P3,600,000
c. P2,500,000
d. P2,650,000

Using the above data, if the decedent is a non-resident alien, his gross estate is
a. P1,195,000
b. P945,000
c. P1,320,000
d. P1,070,000

If in the preceding number there is reciprocity, the gross estate is

a. P1,050,000
b. P1,195,000
c. P1,250,000
d. P1,070,000

Based on the above problem but assuming that the PLDT shares of stocks are not listed in the local
stock exchange, and the decedent owned 1,000 shares at the time of death. The company’s outstanding
shares were 10,000 shares. Its retained earnings was P2,000,000, and the par value per share was P50.
The gross estate should show the said shares at
a. Still at P75,000
b. P250,000
c. P200,000
d. P0

Jin died on April 15, 2018, leaving the following properties:

Real properties
1,000 shares in Good Corporation
Investment in TY Partnership
Other personal properties
Cash

Cash of ₱1,200,000 does not include the following amounts which were received after death:
(a) ₱100,000 representing cash dividend declared by Good Corporation on January 2018, and received
by J. Reyes’s estate on April 30, 2018;
(b) Share of partnership profits for calendar year 2017 in the amount of ₱50,000 received by the estate
on May 5, 2018; and
(c) Rental income of apartment of ₱40,000 due from January to April 2018 at ₱10,000 a month received
by the estate on May 2, 2018.

Determine the gross estate of Jin

a. 7,785,000
b. 7,600,000
c. 3,000,000
d.none of the above
SAL SURPLUS/ OUSTANDING SHARES = BV PER CS

RPLUS/OUSTANDING SHARE =BV PER CS

g properties
SITUS
n P1,500,000) P,1000,000 within
900,000 outside
1,000,000 within
600,000 outside
1,800,000 outside
1,200,000 within
500,000 within
2,500,000 within
1,500,000 outside

resented you the list of expenses and deductions as follows

ng are no longer deductible:

of August 30,2020
ed to P334,000, were paid for funeral expenses. The
f the land amounted to P255,000 during the month.

March 1, 2018:
was withdrawn
14,000,000
9,000,000
2,000,000
300,000

1,500,000
2,600,000
900,000
800,000
4,800,000
1,000,000
500,000

40,000
30,000
25,000
20,000
15,000
10,000
10,000
50,000
ed in the local
pany’s outstanding
er share was P50.

3,000,000
2,000,000
 800,000
600,000
1,200,000

018, and received

ived by the estate

0 a month received
DEDUCTIONS FROM GROSS ESTATE

Note: Under TRAIN LAW, if the decedent died on or after January 1, 2018 the following are no longer ded
1. FUNERAL EXPENSES
2. JUDICIAL EXPENSES
3. MEDICAL EXPENSES
he following are no longer deductible:
1 Mr. Octavio Paz transferred his properties to his relatives due to
his poor health thinking that he is going to die soon. This is an example of:
a. transfer with retention or reservation of certain rights.
b. transfer passing under general power of appointment.
c. transfer for insufficient consideration.
d. transfer in contemplation of death.

2 Under the TRAIN, the estate tax rate is:

a. 6% based on net estate with P250,000 exemption.
b. 6% based on net estate with no exempt amount.
c. 8% based on gross estate.
d. graduated tax rates with P200,000 exemption.

3 A sale, exchange, or other transfer of property made in the ordinary

course of business (a transaction which is a bona fide, at arm’s length, and free
from any donative intent), will be considered as made for an adequate and full
consideration in money or money’s worth and therefore:
a. subject to donor’s tax.
b. not subject to estate tax.
c. subject to estate tax.
d. Choice not given.

4 “A” made the following inter-vivos revocable transfers:

To B To C To D To E
Cost 100,000 100,000 100,000 100,000
FMV, Time of transfer 140,000 100,000 100,000 80,000
Consideration received 100,000 140,000 80,000 10,000
FMV, Time of Death 120,000 200,000 70,000 90,000

a. P 160,000 c. P 130,000
b. P 100,000 d. P 110,000

5 One of the following is not an exemption or exclusion from the gross estate
a. Capital or exclusive property of the surviving spouse
b. Properties outside the Philippines of a non-resident Chinese decedent
c. Shares of stock of San Miguel Corporation of a non-resident Mexican
d. The merger of usufruct in the owner of the naked title

6 A died leaving a farm land. In his will, he transferred the ownership thereof to B but subject to the
 condition that C will have the right to use the land for a period of ten years (usufruct). In the seventh
year, however, C died and in C’s will he surrendered his right over the land to B.
a. The transfer of the usufruct to B is subject to donor’s tax
b. The transfer of the usufruct to B is subject to estate tax
c. The transfer of the usufruct to B is both an inclusion and deduction from the gross estate
d. The transfer of the usufruct to B is a tax-exempt transfer.

7 Gross estate includes all his property, real and personal, tangible or intangible, wherever situated, excep
a. Resident citizen c. Resident alien
b. Non-resident citizen d. Non-resident alien

Proceeds of life insurance shall be included in the gross in the gross estate if the beneficiary designated
8 The estate and the designation is
a. Revocable c. Irrevocable
b. Whether revocable or irrevocable d. Partly revocable, partly irrevocable

9 The executor/administrator and the designation is

a. Revocable c. Irrevocable
b. Whether revocable or irrevocable d. Partly revocable, partly irrevocable

10 A person other than the estate, executor or administrator and the designation is
a. Revocable c. Irrevocable
b. Whether revocable or irrevocable d. Partly revocable, partly irrevocable

11 Statement 1: Taxation of the estate shall be governed by the statute or law in force at the time of
distribution of the estate to the heirs.
Statement 2: Succession takes place upon the determination of the respective shares of the heirs in the
estate of the decedent.
a. True, true
b. True, false
c. False, true
d. False, false
o B but subject to the
usufruct). In the seventh

he gross estate

e, wherever situated, except

the beneficiary designated is:

n force at the time of

ve shares of the heirs in the