CHAPTER 8- 1.

PROBLEMS
1.

2.

a.

Tax on P88,620

Exempt

b.

Tax on P200,000
520,125 x 8%

Exempt
41,610

c.

Tax on P2,000,000

d.

Tax on P10,000,000
2,069,322 x 20%
Estate tax

135,000
1,215,000.00
413,864.40
1,628,864.4

Conjugal properties

P2,340,00
0
2,260,00
0
4,600,00
0

Exclusive properties
Gross estate
Less: Ordinary deductions
Funeral expenses, actual
Judicial expenses
Claims against conjugal properties

P120,000
45,000
55,000

Standard deductions
Net estate
Less: Share of surviving spouse
Gross conjugal

( 220,000
)
(1,000,00
0)
3,380,000

P
2,340,000
220,000
2,120,000

Less: Conjugal deductions

Net conjugal
Share (2,120,000 x 1/2)

1,060,00
0
2,320,00
0

Net estate subject to tax

3.

Conjugal

Exclusiv

Total

e
Family home
Miscellaneous personal properties
Time deposit (P50,000 x )
Real estate (P1,000,000 + 500,000)

P2,000,00
0
800,000
25,000
________

Gross estate

2,825,000

Deductions:
Ordinary Unpaid mortgage
Funeral expenses
Judicial expenses
Total

P 120,000
180,000
60,000
360,000
17

1,500,0
00
1,500,00
0

4,325,000

( 360,000
)

Special:
Family home (maximu m)
Standard deductions
Net estate
Less: Share of surviving spouse (P2,825,000 360,000) x 1/2
Net taxable estate

4.

Conjugal
Commercial land
Family home (P250,000 + 1,300,000)
Fishpond
Motor vehicle
Time deposit, PNB
Other personal properties
Tot al

1,550,000
280,000
160,000
90,000
800,000
2,880,000

Exclusive
1,400,0
00

( 517,000
)

Special Standard deductions

Family home (1,550,000 x )
Net estate
Less: Share of surviving spouse (2,880,000 517,000) x
1/2
Net taxable estate
Conjugal
Family home
Personal property (1,600,000 100,000)
Gross estate
Less: Deductions
Ordinary Funeral expenses
Claims against the estate
Losses
Special Standard deduction

(1,000,000
)
( 775,000
)
1,988,000
1,181,500
806,500
P
2,900,000
1,500,000
4,400,000

100,000
75,000
25,000
1,000,000

18

Total

________
1,400,00 4,280,000
0

Deductions:
Ordinary Unpaid mortgage, commercial land
200,000
Claim against the estate(200,000 x 18% x 27,000
9/12)
Unpaid mortgage, family home
220,000
Funeral expenses
55,000
Judicial expenses
15,000
Total
517,000

5.

(1,000,000
)
(1,000,000
)
1,965,000
1,232,500
732,500

200,00
0)

Family home (2,900,000 x ), limit

1,000,000

Net estate
Less: Share of surviving spouse (4,400,000 200,000) x 1/2
Net taxable estate
6.

Family home
House and lot Bangkok
Domestic shares
DBP Bonds
Appliances, Kampuchea
Receivable from an insolvent debtor, Manila
Receivable from an insolvent debtor, Kampuchea
Gross conjugal / Gross estate
Deductions:
Ordinary Funeral expenses (42,500 + 20,000)
Claims against the estate
Unpaid mortgage, Manila
Unpaid mortgage, Bangkok
Bad debts, Manila
Bad debts, Kampuchea
Special Family home (1,340,000 x )
Standard deduction

(2,000,000
)
2,200,000
2,100,000
100,000
1,340,000
2,200,500
130,000
30,000
168,000
25,000
35,000
3,928,500

62,500
50,000
75,000
50,000
25,000
35,000
670,000
1,000,000

Net estate
Less: Share of surviving spouse (3,928,500 297,500)
x 1/2
Net taxable estate

( 297,50
0)
(1,670,000
)
1,961,00
0
1,815,500
145,500

72. PROBLEMS
1.

Family home

P1,800,00
0
40,00
0
1,840,000
1,500,000
3,340,00
0

Shares of stock (2,000 x P20)

Total conjugal
Add: Exclusive property ricemill
Gross estate
Deductions
Ordinary Claims against the estate

32,00
0
40,500

Funeral expenses, actual

Special deductions Family home (1,800,000 x 1/2)
Standard deduction

900,000
1,000,00
0

Net estate
19

( 72,50
0)
(1,900,000
)
1,367,50

0
( 883,75
0)
483,750

Less: Share of surviving spouse (1,840,000 - 72,500) x

1/2
Net estate subject to tax
2.

Conjugal properties:
Cash
Prize in a raffle

Conjugal
500,000
50,00
0
150,00
0
1,900,00
0
800,00
0
1,500,00
0
30,00
0
4,930,00
0

Proceeds of insurance
House and lot, family home
Other personal properties
Other real properties
Claims against insolvent persons
Gross estate
Less: Deductions
Ordinary
Funeral expenses
Judicial expenses

195,000
15,00
0
30,00
0
350,00
0
35,00
0

Bad debts
Unpaid mortgage, Laguna
Unpaid taxes
Special Family home (1,900,000/2)

Total

4,930,00
0

( 625,000
)
( 950,00
0)
(1,000,00
0)
2,355,555

Standard deduction
Net estate
Less: Share of surviving spouse
Gross conjugal
Less: Conjugal deductions

4,930,000
625,00
0
4,305,00
0

Net

3.

Exclusive

Share (4,305,000 x 1/2)

Net estate subject to tax

2,152,500
203,055

Family home
House in Manila

1,500,000
2,200,00
0
537,50
0
80,00
0
4,317,500

Shares of stock (110 + 1 05)/2 x 5,000

Amount received from employer
Gross estate
20

Less: Deductions
Ordinary
Funeral expenses
Judicial expenses
Legacy to Red Cross
Claims against the estate
Received from employer (RA 4917)

135,000
25,000
15,000
50,000
80,000

Special
Family home, limit
Standard deduction

1,000,000
1,000,000

Net taxable estate

Tax on P2,000,000
12,500 x 11%
Estate tax
4.

( 305,000
)
(2,000,000
)
2,012,500

135,000
1,375
136,375

Cash
House and lot

135,000
950,00
0
450,00
0
465,000
2,000,00
0

Medical equipments
Land in Camarines Sur
Gross estate
Less: Deductions
Ordinary
Funeral expenses
Cremation
Cost of coffin
Expenses of the wake
Burial plot and tombstone
Total
Limit (2,000,000 x 5%)

150,000
20,000
60,000
22,000
252,000
100,00
0
5,00
0
80,0
00
70,00
0
204,16
5

Judicial expenses
Loans from GSIS
Unpaid mortgage (100,000
30,000)
Vanishing deduction (Schedule
1)
Special
Standard deduction

( 459,165
)
(1,000,00
0)
(
15,00
0)
525,83
5

Medical expenses
Net estate subject to tax
Tax on P500,000

P15,000.0
0
2,066.
80

25,835 x 8%
21

Estate tax

17,066.
80

Schedule 1: Vanishing Deduction

Lower value

P420,00
0
30,00
0
390,00
0

Less: Mortgage paid

Initial basis
Less: Deductions (pro- rated)
Funeral expenses
100,000
Judicial expenses
5,000
Loans from GSIS
80,000
Unpaid mortgage
70,000
Total
255,000
(390/2,000) x 255,000

49,72
5
340,27
5
60%
204,16
5

Base
Rate
Vanishing deduction
5.

Conjugal
Family home

Total

4,600,0
00
400,00
0

Personal properties
Land
Building
Car

5,000,00
0

800,000
500,000
900,00
0
2,200,00
0

200,000
200,000
150,000
_______
550,000

997,500
997,500

________

Gross estate
Less: Deductions
Ordinary
Funeral expenses (maximu m)
Judicial expenses
Unpaid mortgage, family home
Vanishing deduction
Tot al
Special
Family home, maximu m
Standard deduction
Net estate

Exclusiv
e

22

7,200,000

( 1,547,500
)
( 1,000,000
)
( 1,000,000
)
3,652,500

Less: Share of surviving spouse (5,000,000 550,000) x

Net estate subject to tax

2,225,000
1,427.500

Schedule 1: Computation of Vanishing Deduction / Property previously taxed

Lower value:
Land
Commercial building
Car
Total
Less: Mortgage paid
Initial basis
Less: Deductions (pro- rated) (1,800,000/7,200,000) x P
550,000
Base
Rate (more than 2 years, not more than 3
years)
Vanishing deduction
6.

a.
b.
c.
d.
e.

P
600,000
500,000
900,000
2,000,000
200,000
1,800,000
137,500
1,662,500
60%
997,500

Deductible
Not deductible
Not deductible
Not deductible
Deductible

7.

Exclusiv
e
2,500,00
0
2,000,00
0
________
4,500,00
0

Personal properties
Family home
Real properties
Gross estate
Ordinary deductions:
Funeral expenses, limit
Judicial expenses
Unpaid taxes
Losses
Special deductions:
Family home

Community

Total

1,750,000

1,400,000
3,150,000

7,650,000

200,000
30,000
12,500
350,000 ( 592,500 )

Standard deduction
Medical expenses, limit
Net estate
Less: Share of surviving spouse (3,150,000
592,500) / 2
Net taxable estate

23

(1,000,000
)
(1,000,000
)
( 500,000
)
4,557,50
0
1,278,750
3,278,75
0

Computation of net distributable estate:

Exclusiv
e
2,500,000
2,000,000
________
4,500,000

Personal properties
Family home
Real properties
Gross estate
Ordinary deductions:
Funeral expenses
Judicial expenses (30,000 + 20,000)
Unpaid taxes
Medical expenses
Losses (350,000 + 130,000)

Community
1,750,000
1,400,000
3,150,000

220,000
50,000
12,500
550,000
480,000

Net estate
Less: Share of surviving spouse (3,150,0001,312,500)/ 2
Net distributable estate
8.

Communit
y
3,000,000

Gross estate
Less: Deductions
Ordinary
Unpaid mortgage (50,000 20,000)
Amount claimed as deduction
Vanishing deduction

7,650,00
0

(1,312,50
0)
6,337,50
0
918,750
5,418,750

Exclusiv
Total
e
2,000,00 5,000,00
0
0

30,000
170,000
384,000

( 584,000
)
(1,000,00
0)
3,416,00
0

Special (Standard deduction)

Net estate
Less: Share of surviving spouse
Gross conjugal

Total

3,000,00
0
584,00
0
2,416,00
0

Less: Conjugal expenses

Net conjugal
Share (2,416,000 /2)

1,208,00
0
2,208,00
0

Net taxable estate

Computation of vanishing deduction:
Value to take
Less:
Mortgage paid (20,000 +
20,000)
Initial basis
Less: Deductions (pro- rated)

540,000
40,000
500,000
24

Amount claimed
170,000
Unpaid mortgage (50,000
30,000
20,000)
Tot al
200,000
(500,000 / 5,000,000) x
20,000
200,000
Base
480,000
Rate (more than 1 year, not more than 2
80%
years)
Vanishing deduction
384,000
9.

a. Decedent was a resident / citizen

Gross estate, Philippines

2,000,00
0
300,00
0
5,000,00
0
1,500,00
0

Less: Expenses
Gross estate, United States
Less: Expenses

1,700,0
00
3,500,0
00
5,200,0
00

Total
Tax on P 5,000,000
200,000 x 15%
Estate tax due
Less: Tax credit
Tax paid, US
Limit (35/52 x 495,000)
Estate tax due after tax credit

465,000
30,000
495,000
280,000
333,173

280,000
215,000

b. Decedent was a nonresident alien.

A nonresident alien is not entitled to a tax credit of estate tax paid or payable
in a foreign country because such properties are not also taxable in the
Philippines.
10
.

Net taxable estate, Philippines

Gross estate, A foreign country
Deductions, A foreign country
Gross estate, B foreign country
Deductions, B foreign country
Gross estate C foreign country
Deductions C foreign country

900,000
800,00
0
200,00
600,00
0
0
500,00
0
(600,00 (100,00
0)
0)
800,00
0
200,00
600,00
0
0

Total
Tax on P2,000,000

1,100,0
00
2,000,0
00
135,000

25

Less: Tax credit

Tax paid A foreign country
Limit (6/20 x 135,000)
Tax paid B foreign country
Limit (6/20 x 135,000)

60,000
40,500
100,00
0
60,000

Total credits, 1 st limitation

2 nd limitation (11/20 x
135,000)
Estate tax payable

40,500
60,00
0
100,50
0
74,25
0

74,250
60,750

26