BAM 208 | Business Taxation

Student Activity Sheet Module #6

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

N
Lesson Title: Transfer Taxes: Deductions from Gross Estate – Part Materials:

IO
2 Calculator, reviewer notebook,
textbook

AT
Lesson Objectives:
At the end of this module, I should be able to: References:
1. Explain the different Special deductions Business and Transfer Taxes by

C
2. Explain standard deductions Enrico Tabag (latest edition)

U
3. Illustrate amounts received by heirs under RA 4917

ED
4. Demonstrate Net share of the surviving spouse
5. Elucidate allowable deductions for nonresident alien
6.

A
M
Productivity Tip:
IN

Form Virtual Study Groups

If you think it will help your productivity, try to connect with some friends and form a virtual study group. Even
PH

if you do not get as much out of it academically, it may be beneficial for your mental health while you’re
studying at home.
F

A. LESSON PREVIEW/REVIEW
O

1) Introduction (2 mins)
TY

Welcome back to the class. Let us be acquainted with your learning.

Essay:
R

1. Select at least 2 Exemptions/exclusions in the gross estate and explain each

PE

1. ____________________________________________________
______________________________________________________________________________________________________________
O

______________________________________________________________________________________________________________
______________________________________________________________________________________________________________
PR

2. ____________________________________________________
______________________________________________________________________________________________________________
______________________________________________________________________________________________________________
______________________________________________________________________________________________________________

2. Select at least 2 Inclusions in gross estate and explain each

1. ____________________________________________________

This document is the property of PHINMA EDUCATION

 BAM 208 | Business Taxation
Student Activity Sheet Module #6

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

______________________________________________________________________________________________________________

N
______________________________________________________________________________________________________________
______________________________________________________________________________________________________________

IO
2. ____________________________________________________
______________________________________________________________________________________________________________

AT
______________________________________________________________________________________________________________
______________________________________________________________________________________________________________

C
U
2) Activity 1: What I Know Chart, part 1 (3 mins)

ED
What I Know Questions: What I Learned (Activity 4)
1. How much is the
standard deduction?
A
M
2. What is Amount
IN
received by heirs under
RA No. 4917?
PH
F

B. MAIN LESSON
O

1) Activity 2: Content Notes (13 mins)

LO 1: Explain the different Special deductions
TY

The Family Home • An amount equivalent to the current fair market value of the decedent’s family
home: Provided, however, that if the said current fair market value exceeds Ten
R

million pesos (₱10,000,000.00), the excess shall be subject to estate tax

• If the family home is conjugal property and does not exceed (₱10,000,000.00), the
PE

allowable deduction is one-half (1/2) of the amount only.

Medical expenses • All medical expenses (cost of medicines, hospital bills, doctor’s fees, etc.) incurred
O

(whether paid or unpaid) within one (1) year before the death of the decedent shall
PR

be allowed as a deduction provided that the same are duly substantiated with
official receipts.
• For services rendered by the decedent’s attending physicians, invoices, statements
of account duly certified by the hospital, and such other documents in support
thereof and provided, further, that the total amount thereof, whether paid or
unpaid, does not exceed Five Hundred Thousand Pesos (P500,000).
Standard • A deduction in the amount of One Million Pesos (P1,000,000.00) shall be allowed
deduction as an additional deduction without need of substantiation.

This document is the property of PHINMA EDUCATION

 BAM 208 | Business Taxation
Student Activity Sheet Module #6

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

N
LO 2: Explain standard deductions

IO
Standard • A deduction in the amount of One Million Pesos (P1,000,000.00) shall be allowed
deduction as an additional deduction without need of substantiation.

AT
LO 3: Illustrate amounts received by heirs under RA 4917

C
U
REPUBLIC ACT No. 4917 - AN ACT PROVIDING THAT RETIREMENT BENEFITS OF EMPLOYEES OF PRIVATE

ED
FIRMS SHALL NOT BE SUBJECT TO ATTACHMENT, LEVY, EXECUTION, OR ANY TAX WHATSOEVER.

Amount received • Any amount received by the heirs from the decedent’s employer as a consequence
by heirs under RA
No. 4917 A
of the death of the decedent-employee in accordance with Republic Act No. 4917
is allowed as a deduction provided that the amount of the separation benefit is
M
included as part of the gross estate of the decedent.
IN

LO 4: Demonstrate Net share of the surviving spouse

PH

Share of the Surviving Spouse = Community/Conjugal Properties Net estate x 50%

F

LO 5: Elucidate allowable deductions for nonresident alien

O

1. Expenses, losses, indebtedness and taxes

TY

2. Property previously taxed

3. Transfers for public use
R

4. Net share of the surviving spouse in the conjugal partnership or community property
PE

No deduction shall be allowed in the case of a non-resident decedent not a citizen of the Philippines,
unless the executor, administrator, or anyone of the heirs, as the case may be, includes in the return
O

required to be filed in the Section 90 of the Code the value at the time of the decedent’s death of that
PR

part of his gross estate not situated in the Philippines.

2) Activity 3: Skill-building Activities (with answer key) (18 mins + 2 mins checking)
For multiple choice questions, encircle your answer. For problem solving, provide the required information. For
true or false statements, write TRUE if the statement is correctly stated, otherwise, FALSE.

A. Standard Deduction
1. The following statement are correct regarding standard deduction under the TRAIN Law, except:

This document is the property of PHINMA EDUCATION

 BAM 208 | Business Taxation
Student Activity Sheet Module #6

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

a. A deduction in the amount of P5,000,000 shall be allowed as an additional deduction without need of

N
substantiation
b. The full amount of P5,000,000 shall be allowed as deduction for the benefit of the decedent

IO
c. Standard deduction is not allowed as deduction for the benefit of the decedent
d. None of the above

AT
B. Family Home

C
2. Which of the following statements is incorrect in connection with family home deduction under the TRAIN

U
law?

ED
a. Family home deduction shall be allowed only if such family home is situated in the Philippines
b. The total value of the family home must be included as part of the gross estate of the decedent
c. For purposes of availing family home deduction, a person may constitute only one family home

A
d. Family home deduction may not be lower than P10,000,000
3. In decedent died on Nov. 1, 2019 leaving a family home composed of the following: Conjugal house worth
M
P8,000,000 and the land which he exclusively owned valued at P4,000,000. He also owns a vacation house in
IN

Baguio worth P7,000,000. The deductible amount of family home is _________________.

4. Based on the preceding number, if the house is also an exclusive property, how much is the deductible family
PH

home allowance? _________________________.

C. Medical Expenses – repealed by TRAIN law; allowed only if the decedent died before January 1, 2018.
F

5. Medical expense is allowed as a deduction from the gross estate of a decedent who died prior to the effectivity
O

of the TRAIN Law. Which of the following is correct?

I. If the actual amount of medical expenses incurred is P300,000, then only P300,000 shall be allowed as
TY

deduction and not to the extent of the P500,000 threshold amount.

II. If the actual amount of medical expenses incurred within the year prior to decedent’s death is P700,000,
R

only the maximum amount of P500,000 shall be allowed as deduction. If in case the excess of P200,000 (P700,000
PE

– P500,000) is still unpaid, such amount shall be deducted from the gross estate as “claims against the estate”.
a. I only
b. II only
O

c. I and II
PR

d. None of the above

D. Amount Received by heirs under R.A. 4917

What are the requisites of the deductibility of Amount Received by heirs under RA 4917?
6. ___________________________________________________________________________________________________________________
7. ___________________________________________________________________________________________________________________

3) Activity 4: What I Know Chart, part 2 (2 mins)

This document is the property of PHINMA EDUCATION

 BAM 208 | Business Taxation
Student Activity Sheet Module #6

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

N
4) Activity 5: Check for Understanding (5 mins)
The following information were from the estate of a married citizen decedent who died on June 2019:

IO
Property:
Family home P12,000,000

AT
Domestic shares inherited 6 years ago during marriage 6,000,000
Bank deposit, representing dividend earned during marriage 1,000,000

C
Jewelry received as gift 8 years ago during marriage 1,000,000

U
Expenses:

ED
Claim against the estate 4,000,000
Funeral expenses 1,000,000
Judicial 500,000
Medical expenses
A
1. Under conjugal partnership of gains, gross conjugal property is _______________________.
1,500,000
M
2. The ½ share of the surviving spouse is _______________________.
IN

3. The net taxable estate of the decedent is ______________________.

PH

C. LESSON WRAP-UP
1) Activity 6: Thinking about Learning (5 mins)
Work tracker. Congratulations! You have finished the module for today! Shade the number of the module that
F

you finished.
O

Period 1 Period 2 Period 3

TY

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
R

How do you feel today?

PE

I feel (unsatisfactory/satisfactory/excellent) because _______________________________________________________________.

What are your challenges in learning the concepts in this module? If you do not have challenges, what is your
O

best learning for today?

PR

______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________

What are the questions/thoughts you want to share to your teacher today?
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________

FAQs

This document is the property of PHINMA EDUCATION

 BAM 208 | Business Taxation
Student Activity Sheet Module #6

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

1. What does the term "Funeral Expenses" include?

N
The term "FUNERAL EXPENSES" is not confined to its ordinary or usual meaning. They include:
1. The mourning apparel of the surviving spouse and unmarried minor children of the deceased bought and

IO
used on the occasion of the burial;
2. Expenses for the deceased’s wake, including food and drinks;

AT
3. Publication charges for death notices;
4. Telecommunication expenses incurred in informing relatives of the deceased;

C
5. Cost of burial plot, tombstones, monument or mausoleum but not their upkeep. In case the deceased

U
owns a family estate or several burial lots, only the value corresponding to the plot where he is buried is

ED
deductible;
6. Interment and/or cremation fees and charges; and
7. All other expenses incurred for the performance of the rites and ceremonies incident to interment.

A
Expenses incurred after the interment, such as for prayers, masses, entertainment, or the like are not deductible.
Any portion of the funeral and burial expenses borne or defrayed by relatives and friends of the deceased are
M
not deductible. Actual funeral expenses shall mean those which are actually incurred in connection with the
IN

interment or burial of the deceased. The expenses must be duly supported by official receipts or invoices or other
evidence to show that they were actually incurred. (Sec 6 (A)(1) of RR 2-2003)
PH

2. What is the valuation of estate?

Valuation of Estate The estate shall be valued at its fair market value (FMV) as of the time of death. However, the
value of real property as of the time of death shall be whichever is higher of:
F

1. The zonal value as determined by the Commissioner; or

O

2. The FMV as shown in the schedule of values fixed by the Provincial or City Assessors.
TY

KEY TO CORRECTIONS
Review
R

1. Select at least 3 Exemptions/exclusions in the gross estate and explain each

PE

1. Merger of usufruct and owner of naked title

2. Transmission of the fiduciary heir to the fideicommissary
3. Second transfer as desired by the predecessor
O

4. Transfer for charitable contributions and donations

PR

5. Reciprocity clause
6. Share/capital of the surviving spouse

2. Select at least 3 Inclusions in gross estate and explain each

1. Revocable transfers
2. Transfers in contemplation of death
3. Property passing under general power of appointment
4. Decedent’s interest in profits, insurance, right of usufruct

This document is the property of PHINMA EDUCATION

 BAM 208 | Business Taxation
Student Activity Sheet Module #6

Name: _________________________________________________________________ Class number: _______

Section: ____________ Schedule: ________________________________________ Date: ________________

5. Proceeds of life insurance

N
6. Transfer for insufficient consideration
7. Claims against insolvent person

IO
8. Amount received by heirs under RA 4917

AT
Activity 1 and 4.
Questions: What I Learned (Activity 4)

C
1. How much is the standard A deduction in the amount of One Million Pesos (P1,000,000.00) shall

U
deduction? be allowed as an additional deduction without need of substantiation.

ED
2. What is Amount received by heirs Any amount received by the heirs from the decedent’s employer as a
under RA No. 4917? consequence of the death of the decedent-employee in accordance
with Republic Act No. 4917 is allowed as a deduction provided that the

A
amount of the separation benefit is included as part of the gross estate
of the decedent.
M
IN

Activity 3.
1. C
PH

2. D
3. P8,000,000
4. P10,000,000
F

5. A
O

6. Include such amount in the gross estate

7. Amount deductible – amount received by the heirs from the decedent’s employer as a consequence of the
TY

death of the decedent-employee.

R

Activity 5.
PE

1. P13,000,000
2. P4,500,000
3. P500,000
O
PR

This document is the property of PHINMA EDUCATION