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c) The "Initial Basis" in Step (b) shall be further reduced by the following ratio of the expenses,
losses, indebtedness, taxes or transfer for public purposes:
Initial Basis
------------- X
Gross estate
- 1 year - 100%
- 2 " - 80%
- 3 " - 60%
- 4 " - 40%
- 5 " - 20%
over - 0%
The final basis (Step (d) multiplied by the percentage deduction (Step (e) will be the vanishing
deduction allowable.
9,080,000
P5,920,000
--------------------------------
P 603,000
OF EXCESS
SHALL BE
PLUS
Exempt
Below P200,000
OVER
5%
P200,000
P15,000
8%
500,000
135,000
11%
2,000,000
465,000
15%
5,000,000
1,215,000
20%
10,000,000
of the Philippines:
a) A proportion of the expenses, losses, indebtedness and taxes:
Formula:
Phil. Gross Estate
------------------ X
World Gross estate
Expenses, losses
indebtedness & taxes
Gift tax is an excise on the transfer by a living person to another of money or other property
without consideration.
Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of
another, who accepts it.
C. Kinds of Donation:
1. Inter-vivos
2. Mortis causa
3. Indirect donation (Except real property referred to in Section 24(D) and Section 27(D)(5) of the
NIRC).
SHALL BE
OF EXCESS
PLUS
OVER
2%
P100,000
2,000
4%
200,000
14,000
6%
500,000
44,000
8%
1,000,000
204,000
10%
3,000,000
404,000
12%
5,000,000
1,004,000
15%
10,000,000
Exempt
Donation
a) 1/15/99 Cash
b) 1/15/99 Cash
3/10/99 Cash
Exempt
100,000
250,000
350,000
8,000
600,000-Stranger
104,000
200,000
x 30%
60,000
2000
4000
6,000
Note: Letter (f) was donated in year 2000 therefore; this is not included in the cumulative total for
1999's donations.
D. Interest:
(Same as estate tax)