MEMORY AID IN TAXATION LAW

SAN BEDA COLLEGE OF LAW 2003 CENTRALIZED BAR OPERATIONS Reproduction in any form of this copy is strictly prohibited!!!

ANNEX KK: ESTATE AND HEIRS AS INCOME TAXPAYERS

The taxable year is 2002. Distributions were made in 2002.

Taxpayer in 2002?

Distribution in 2002 out of the corpus of the estate

none (not income, thus, no income tax may be imposed)

Distribution in 2002 out of the income of 2001

IF: (a) DISTRIBUTION is made in 2002 out of the income of 2002 (b) RETENTION is made by the estate of the income of 2002 THE ESTATE

none (already subjected to income tax in taxable year 2001)

heir estate

Illustration: Mr. X died leaving a net estate of P5,000,000. The estate is in the hands of the executor. Mr. Y, married, is one of the heirs to the estate. The estate had a gross income of P500,000 and expenses of P100,000 on the properties in the estate. Mr. Ys own income and expenses of P150,000 and P80,000, respectively. The executor distributed to Mr. Y the following: From the properties (called the corpus) P 125,000 From the current years income 75,000

ESTATES INCOME TAX

HEIRS INCOME TAX

Gross Income P 500,000 Less: Deductions For expenses P 100,000 For income distribution 75,000 175,000 Net Income P 325,000 Less: Exemption 20,000 Taxable income P 305,000 Income Tax (Sec 24A) P 66,500

Gross Income Own gross income P Income received from the estate Total P Less: Own deductions Net Income P Less: Personal exemption Taxable income P Income tax P

150,000 75,000 225,000 80,000 145,000 32,000 113,000 17,100

KK 1
TAXATION LAW COMMITTEE: Chairperson: Rhodaline Regoso; Asst. Chairperson & EDP: Maricel Alisuag; Subject Heads:Junelet Mataro, Michelle Alvarez, Efren Dizon, Khan Guieb; Members: Alexis Cervantes. Leizl Calimaran, Berna Quibal, Noreli De Claro, Jocelyn Gamboa, Albert Rodriguez, Karla Cabel, Joey Caraig, Rodolfo Quitolbo, Liam Pagdanganan, Paul Lawrence Lim, Alder Delloro, John Ivan Tablizo, Ria Ibaviosa, Pancho Vasquez, Aileen Roxas, Leif Opia

MEMORY AID IN TAXATION LAW

SAN BEDA COLLEGE OF LAW 2003 CENTRALIZED BAR OPERATIONS Reproduction in any form of this copy is strictly prohibited!!!

KK 2
TAXATION LAW COMMITTEE: Chairperson: Rhodaline Regoso; Asst. Chairperson & EDP: Maricel Alisuag; Subject Heads:Junelet Mataro, Michelle Alvarez, Efren Dizon, Khan Guieb; Members: Alexis Cervantes. Leizl Calimaran, Berna Quibal, Noreli De Claro, Jocelyn Gamboa, Albert Rodriguez, Karla Cabel, Joey Caraig, Rodolfo Quitolbo, Liam Pagdanganan, Paul Lawrence Lim, Alder Delloro, John Ivan Tablizo, Ria Ibaviosa, Pancho Vasquez, Aileen Roxas, Leif Opia