DEDUCTIONS

Part 1
ORDINARY DEDUCTIONS

SPECIAL DEDUCTIONS

SHARE OF SURVIVING SPOUSE

 ORDINARY DEDUCTIONS
 Claims against the estate

 Claims of the deceased against insolvent person

 Unpaid Mortgages and Taxes

 Losses incurred during the settlement of the estate

 Property previously taxed (Vanishing deduction)

 Transfers for public use

 SPECIAL DEDUCTIONS

Standard deduction

 Citizen or resident P5,000,000

 Non-resident alien P500,000

 No need of supporting documents

[In lieu of medical, funeral, and judicial expenses]

 SPECIAL DEDUCTIONS

Family home:
 Fair market value

 But must not exceed P10, 000,000

 The excess shall be subject to estate tax.

SHARE OF SURVIVING SPOUSE

A portion of the estate that is

considered owned by the surviving
spouse.
 CLAIMS AGAINST THE ESTATE
Requisites:

1) The liability is a personal obligation of the deceased existing at the time of his
death. The instrument must be duly notarized.

2) It was contracted in good faith.

3) It is valid and enforceable in court. (not extinguished)

4) If the loan was contracted within three (3) years before the death of the
decedent, the administrator or executor shall submit a statement showing the
disposition of the proceeds of the loan.
 EXTINGUISHMENT OF OBLIGATION
“Obligations are extinguished:
(1) By payment or performance:
(2) By the loss of the thing due:
(3) By the condonation or remission of the debt;
(4) By the confusion or merger of the rights of creditor and debtor;
(5) By compensation;
(6) By novation.
Other causes of extinguishment of obligations, such as annulment,
rescission, fulfillment of a resolutory condition, and prescription,
are governed elsewhere in this Code.” [Art. 1231, Civil Code]
 CLAIMS OF THE DECEASED AGAINST
INSOLVENT PERSON

The estate may recover a portion of the receivables from

an insolvent person.

Hence, only the amount that cannot be collected

anymore will be considered deductible.
 INSOLVENT

“Insolvent shall refer to the financial condition of a debtor

that is generally unable to pay its or his liabilities as they
fall due in the ordinary course of business or has
liabilities that are greater than its or his assets.” [Section 4 (P),
R.A. 10142]
 UNPAID MORTGAGE
 Mortgage contract entered into by the decedent during
his lifetime and remain unpaid at the time of his death.

 The value of the mortgaged property, undiminished by

the unpaid obligation, must be included in the
computation of the gross estate.
 UNPAID TAXES

Taxes which have accrued on or

before the date of death of the
decedent which remain unpaid.
 UNPAID TAXES

Do not include:

 Income tax upon income received after

death.

 Property taxes not accrued before his death.

 Estate tax due.

 Losses incurred during the settlement of the estate.
Requisites:
 
 Incurred during the settlement of the estate arising from fires, storms,
shipwreck, or other casualties, or from robbery, theft, or embezzlement;

 Not compensated for by insurance;

 
 Have not been claimed as deduction for the income tax purposes

 Incurred not later than the last day for the payment of the estate tax.
 CASUALTY

“The term "casualty" is the complete or partial destruction of

property resulting from an identifiable event of a sudden,
unexpected, or unusual nature. It denotes accident, some sudden
invasion by hostile agency, and excludes progressive deterioration
through steadily operating cause. Generally, theft is the criminal
appropriation of another’s property for the use of the taker.
Embezzlement is the fraudulent appropriation of another's property
by a person to whom it has been entrusted or into whose hands it
has lawfully come.” [H. Tambunting Pawnshop, Inc. v. CIR, G.R. No. 173373, 29 July 2013]
 TIME FOR FILING

For the purpose of determining the estate tax

provided for in Section 84 of this Code, the estate
tax return required under the preceding
Subsection (A) shall be filed within one (1) year
from the decedent's death. [Sec. 90 (B), NIRC]
 PAYMENT OF ESTATE TAX

The estate tax imposed by Section 84 shall

be paid at the time the return is filed by the
executor, administrator or the heirs. [Sec. 91 (A),
NIRC]
 dfs
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THANK YOU!