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Contents 1. Define Estate Tax

2. Justification of Imposition
3. Classification of Decedents
4. Composition of the Gross Estate
CHAPTER 2
5. Valuation of Gross Estate
GROSS ESTATE
6. Exemption & Exclusions
7. Estate Tax Rate and Filing,
Payment & Returns

▪ Excise tax
Definition ▪ Ad-valorem (according to the value) Classification Decedent Gross Estate
and Nature of Decedents
▪ Accrual of tax is distinct from the
Estate Tax Citizen ● Property (Real or Personal)
obligation to pay WHEREVER situated
Resident Alien ● Intangible personal property
WHEREVER situated
Justification for the Imposition of Tax
Non-Resident ● Real property IN the Philippines
1. Benefit-Received Theory Alien ● Tangible personal property IN the
2. Privilege or State Partnership Theory Philippines
● Intangible personal property with
3. Ability to Pay Theory situs in the Philippines UNLESS
4. Redistribution of Wealth Theory excluded on the basis of reciprocity

1. Franchise must be exercised in the

👧
Reciprocity Intangibles
Clause on
Intangible 👦 with Situs in
the
Philippines
2. Shares, obligations or bonds
personal Decedent → resident Filipina→ citizen of the Philippines a. issued in the Philippines
property citizen of USA Philippines not residing in
b. issued by a Foreign corporation with 85%
USA
of the business is in the Philippines
c. issued by a Foreign corporation with
business situs in the Philippines
Non Resident Alien
3. Shares or rights in any partnership,
business or industry established in the
Philippines

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Situs of PROPERTY SITUS

Tangible and
Real Property and Location of the property
Intangibles Tangible personal
property

Shares, franchise, Where the intangible is exercised

copyright regardless where the certificate
is stored

Receivable Residence of the debtor

Bank deposit Location of the depository bank

In General FMV at the time of death

Composition Valuation of
Personal Property
● Real Property
of the Gross the Gross Real Property HIGHER between:
● Personal Tangible Property ● FMV determined by the Commissioner
Estate Estate (zonal)
● Intangible personal property ● FMV on provincial and city assessor
(assessed value)
○ Shares of stock
Shares of Stock 1. Unlisted Common- BV per share
○ Bank deposit 2. Unlisted Preference- PV per share
3. Listed- FMV is the arithmetic mean
○ Dividends declared BEFORE his death (average) between the highest and
lowest quotation nearest to the date of
but received after death death

○ Partnership profit which have accrued Units of participation in any Bid price nearest the date of death
recreation or amusement club
before his death Right to usufruct, use or Basic Standard Mortality Table
○ Usufructuary right habitation and annuity

• Merger of Usufruct & Naked Title

• Exclusive property of the SURVIVING
EXCLUSIONS SPOUSE (exclude) EXCLUSIONS • Special Power of Appointment- can only
A a. Capital- husband B appoint from a restricted or designated class
Section 85 & b. Paraphernal-wife CHAPTER 4 Section 87 of persons other than himself
104 of the Tax
Code • Property outside the Philippines of a • Fiduciary Transfers-same as #2 but the
NRA (exclude) relationship of Heir 1 and 2 should not be
more than 1 degree
• Intangible personal property in the
Philippines of a NRA under • Transfers to social welfare, cultural &
Reciprocity Law (exclude) charitable organizations(include first
then BIR will decide)

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A. TRANSFER IN B. REVOCABLE TRANSFERS PROCEEDS OF LIFE INSURANCE

CONTEMPLATION OF DEATH
CLAIMS AGAINST
-terms of enjoyment of the property
INSOLVENT PERSONS ▪ Must be insurance on the life
Composition of - Prompted by thought of may be altered, amended, revoked or Miscellaneous of the decedent
death terminated by the decedent ▪ The incapacity of the
the Estate - Controlling motive- DEATH
Items ▪ Beneficiary:
Refer to page 50 Case D for debtor to pay his
1. Actually and Refer to page 49 Case A-C for illustration obligation should be - His
Physically illustration proven before a estate/executor/administr
ator
present D. TRANSFERS FOR INSUFFICIENT deduction
C. TRANSFERS UNDER CONSIDERATION ▪ INCLUDE FULL amount - Any third person NOT
2. Not GENERAL POWER OF IRREVOCABLE
★ FMV at the time of sale or of the claim
physically in APPOINTMENT
transfer ▪ Portion of uncollectible ▪ Group insurance taken by the
-authorizes the donee of the
the estate power to appoint any person he
○ consideration if full &
should be allowed as employer- NOT SUBJECT TO
adequate
deduction ESTATE TAX
pleases ★ FMV at the time of death
○ amount to be included in
▪ PHILIPPINE INSURANCE
Refer to page 51-52 for Refer to page 56 Case CODE→Not expressly stated-
illustration the gross estate
Refer to page 54 Table 2-3 for the
A-B for illustration presumed to be revocable
rules of insufficient consideration
Refer to page 57 for table

ASSIGNMENT#1:

Answer the following in CHAPTER 2

Answers:
“
Put your answers in ¼ sheet yellow pad
Submit next meeting(20 points)
Page 69-True or False #s 1-20

If the answer is false, write the word or phrase that

makes it incorrect

No need to correct it.

15

▪ Beginning Jan 1 2018, estate tax rate is 6%

▪ Accrual of tax is distinct from the obligation to ▪ FILING → Within 1 year from the decedent’s
Estate Tax pay Estate Tax death
Payment & ▪ Shall be paid by EXECUTOR/ADMINISTRATOR Payment &
Returns or HEIRS Returns
▪ EXTENSION (FILING)→ meritorious cases→
▪ REGARDLESS of the value (real property, motor
Requirements Time of not exceeding 30 days from the filing of the
vehicle, shares of stocks or any similar property )
Filing & return
→ Certificate Authorizing Registration from the
BIR is required for the transfer of ownership Payment
▪ GROSS Value exceeds 5mio → should be duly ▪ EXTENSION (PAYMENT) → Commissioner →
certified by a Certified Public Accountant 5 years Judicial Settlement or 2 years extra
- Itemized Assets judicial
- Itemized Deductions
- Tax Due

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Estate Tax Estate Tax ▪ Decedent’s domicile at the time of his death
▪ Cash Installment →within 2 years from
Payment & the date of filing Payment &
Returns Returns ▪ Non Resident Citizen or Non Resident Alien

▪ Partial Disposition of estate & → place where the executor or

Modes of Place of administrator is registered
Payment application of its proceeds to the estate filing
tax due → executor or administrator is not
registered → legal residence

▪ Extension→ shall be filed with the RDO ▪ If the NRA or NRC does not have any executor
for approval by the Commissioner or his or administrator→ RDO 39- South Quezon
duly authorized representative City

1. Paid after the statutory date of tax but within the

Estate Tax 1. Executor / Administrator
Payment & 2. Heirs or Beneficiary → extent of liability
Returns is only up to his share of the inheritance
3. Should there be no executor or
Liable to Pay administrator → any person in actual or
constructive possession of any property
of the decedent must file the return
4. Two or more executors or
administrators→ all are severally liable
Estate Tax extension period, shall be subject to INTEREST but
Payment & NOT SURCHARGE
Returns 2. Interest is 12% (Jan 1 2018 TRAIN) → unpaid
amount of tax from the date computed until fully
Additional paid
Information 3. Penalty of 25%- no fraudulent intent of the taxpayer
4. Penalty of 50%- false, malice, fraudulent intent
5. No transfers of any shares, bond or right to any new
owner unless a certification from the Commissioner
that the applicable tax has been paid
6. BANKS→ shall allow any withdrawal subject to 6%
final tax

Estate Tax Republic Act No. 11956 (“RA

Payment &
11956”), extending the deadline to
Returns
avail the estate tax amnesty for
Additional another two years, or until June 14,
Information 2025, lapsed into law on August 5, QUIZ #1
2023. The law also extends the 30 JANUARY 2024
coverage of the amnesty to the
estates of persons who passed away
Tuesday
on or before May 31, 2022. CHAPTER 1-2