Professional Documents
Culture Documents
Revocable transfers
Transfer in contemplation of death
Transfer for insufficient consideration
Property passing under general power
of appointment; and
e) Proceeds of life insurance policy
payable to a revocable beneficiary
Taxable transfers are real and/or personal
properties that are not physically available at
the time of death because they have been
conveyed or transferred subject to condition
and revocable by the decedent during his
lifetime.
Decedent remains to control and own them
until his death.
3. Decedents accrued interests. All interest,
earnings and remaining valuable rights
accruing to the decedent at the time of his
death even if received or collected after his
death, such as:
a) Accrued rent or interest income
b) Accrued profit in business and/or
partnerships
c) Declared dividend on or before death
not yet collected; and
d) Usufruct right transferrable to his
heirs.
Compositions and Classifications of the
Gross Estate
In general, gross estate shall include of all
property
(real,
personal,
tangible
or
intangible) owned by the decedent at the
time of his death. However, it does not
include the following:
a) Exclusive properties of the surviving
spouse
b) Properties, interests rights and all
income accruing after the death of the
decedent
c) Properties or transfers exempt by law
from estate tax
3.
4.
5.
6.
7.
Stocks, bonds
valuation
and
other
securities
Revocable transfers
Transfer in contemplation of death
Transfer for insufficient consideration
Property passing under general power
of appointment; and
e) Proceeds of life insurance policy
payable to a revocable beneficiary
2. Others
a) Decedents interest accured at the
date of death
b) Usufruct right transferrable to the
decedents heirs
c) Calims against an insolvent person
d) Amount received by heirs under RA
No. 4917
Revocable transfer
Transfer of property with retention or
reservation of rights over the property by the
donor while he still lives.
1. by gift where the donor has reserved the
power to alter, amend, and revoke donation.
already relinquished
property.
interest
over
the
with
2. Include in
beneficiary is:
the
gross
estate
if
the
Revocable
The decedents estate, his administrator or
his executor.
Where the insured transfers a life insurance
policy in contemplation of death, the amount
to be included in the gross estate is the face
value of the policy, not the cash surrender
value.
Estate Tax-Exempt
Insurance
Proceeds
of
Life
Exclusions
a) GSIS
b) Life insurance proceeds on life
insurance policy taken out by the
decedent himself, upon his own life,
where the beneficiary is a third person
and is irrevocably designated
c) Life insurance proceeds on group
insurance taken out by his employer
on the employees life, whoever the
beneficiary
maybe,
whether
the
designation as beneficiary is revocable
or irrevocable.
3. War benefits
a) USVA
b) Damages suffered during WWII
c) Payments from the PH of US govt to
the legal heirs of deceased of WWII
Veterans and deceased civilian for
supplies/services furnished to the US
and PH Army
4. Grants and donations
Exemptions
special laws
2. Insurance benefits
under
a) Intramuros administration
b) Bequests to be used actually, directly,
and
exclusively
for
educational
purposes.
Other exemptions and exclusions
1. Properties held in trust by the decedent;
2. Transfer by way of bona fide sales
3. Portion paid under sales with inadequate
consideration
4. right of usufruct if non0transferable to the
heir
5. properties passing under the special
power of appointment
Deductions from gross estate
items which the law on estate tax allows to
be subtracted from the value of the gross
estate in order to arrive at the net taxable
estate.
Rules of deductions from gross estate
1. Valid deductions must be specifically
granted and within the limits as provided by
law.
Items of expenses or obligations which are
not allowed to be deducted directly could not
be deducted indirectly. Therefore, expenses
in excess of limit amount are not allowed to
be deducted as claims against the estate.
2. Substantiation- must be supported with
documentary evidences
4
3. Common deductions
Filipino
Citizen
or
1. Ordinary deductions
2. Special deductions
3. Share of the surviving spouse
Ordinary deductions
Deductions that are comprised of expenses,
losses, indebtedness, taxes etc. (ELITE),
transfers fro public use and vanishing
deductions.
ELITE deductions actually reduce the taxable
estate as well as the amount of distributable
estate to the heirs. They consist of the
following:
a. funeral expenses
b. judicial expenses
c. casualty losses
d. claims against the estate
e. claims against the insolvent persons
f. unpaid taxes and mortgages
Funeral expenses
Substantiation requirements
Simple loan
Judicial expenses
Property previously
deduction)
taxed
(vanishing
Notice of
death
(within 2
months)
Excise
tax
return
within 6
months
CPA
CERT.
Excee
ds
20,00
0
YES
Excee
ds
200,0
00
YES
Excee
ds
2,000,
000
YES
NO
YES
YES
NO
NO
YES
for
each
of
the
ff.
payment
in
assessment
the
notice
of
50% surcharge
1. willful neglect to file the return within the
period prescribed by the code or by rules and
regulations
2. return filed is false or fraudulent
Interest 20% per annum shall be imposed
on the basic unpaid amount of tax from the
date prescribed for the payment until the
amount is fully paid.
Payment of Estate tax by installment
1. Clearance shall be released only with
respect
to
property
the
corresponding/computed tax on which
has been paid
2. Any amount paid after the statutory
due date of the tax shall be imposed
the corresponding applicable penalty
thereto
3. If the commissioner or his duly
authorized representative approves
the payment of the tax after the due
date, the imposable penalty thereon
shall only be interest.
4. The commissioner may enforce action
against the estate after the due date
of the estate tax provided that all the
applicable
laws
and
required
procedures are observed
3. business organization
Valuation of donation
The value of the property/right donated shall
be the FMV existing at the time when the gift
was made.
Usufruct Donation
The value of donated usufruct is determined
by computing the annual value of usufruct to
the extent of its present value based on the
number of years of usufractuary right.
Real Property Donation
Assessed value or zonal value whichever is
higher.
1.
2.
3.
4.
5.
6.
7.
8.
Stocks, bonds
donation
and
other
securities
Renunciation of Inheritance
General renunciationdonors tax
not
to
1. Dowry Exemption
Reduced by 10,000 by ea. Parent
1. Gift is on account of marriage
2. Donee must be their legitimate,
recognized
natural,
or
adopted
children
3. Giving of the gift is made before the
celebration of marriage or within one
year thereafter.
2. Encumbrance Assumed by the Donee
The law allows an encumbrance as deduction
from gross gift if assumed by the done
because such obligation is onerous on the
part of the done; hence not part of the gift.
3. Diminution of gift provided by the
donor
The decrease in the value of property
donated as a result of a condition made by
the donor to the done to give a portion of the
donated property to another person.
Donations to the National Government
Destroyed donations
Gross gift
The value of property or right donated
subject to donors tax before any allowable
deduction is a gross gift.
Net gift
Net economic benefit from the transfer that
accrues to the done.
If a mortgaged property is transferred as a
gift but imposing upon the done the
obligation to pay the mortgage liability, the
net gift is measured by deducting the
amount of the mortgage assumed from the
FMV of the property.
1.
2.
3.
4.
5.
6.
7.
8.
Educational
Charitable
Religious
Cultural
Social welfare
Accredited NGO
Trust or philanthropic organizations
Research institutions
Penalties
25% surcharge- it is imposable if no
return is filed within the prescribed time
except
that
when
the
return
is
subsequently filed by the taxpayer. No
such surcharge shall be imposed if:
1. The donors tax return if filed
voluntarily
2. Without notice from the BIR
Commissioner
3. It is shown that there was a
reasonable cause for failure to file
the return
4. The failure was not due to willful
neglect
50% surcharge is imposable under the ff.
instances:
1. Willful neglect to file the return
within the period prescribed by the
Code or by rules and regulations
2. The return filed is false or
fraudulent
Interest at the rate of 20% per annum
shall be imposed on the basic unpaid amount
of tax from the date prescribed for payment
until the amount is fully paid.
11