ESTATE and DONORS TAX

1) LORENZO POSADAS
A transmission by inheritance is taxable at the time of the predecessor's death,
notwithstanding the postponement of the actual possession or enjoyment of the
estate
by the beneficiary, and the tax measured bay the value of the property transmitted at
that time regardless of its appreciation or depreciation. The tax therefore is upon
transmission or the transfer or devolution of property of a decedent, made effective
by
his death.
The compensation of a trustee, earned, not in the administration of the estate, but in
the management thereof for the benefit of the legatees or devisees, does not come
properly within the class or reason for exempting administration expenses.
That inheritance taxation is governed by the statute in force at the time of the death
of
the decedent.
One liner: the phrase "judicial expenses of the testamentary or intestate proceedings"
does not include the compensation paid to a trustee of the decedent's estate when it
appeared that such trustee was appointed for the purpose of managing the decedent's
real estate for the benefit of the testamentary heir.
2) SISON vs TEODORO
Expenses or premiums paid or incurred by an executor or administrator serving
without compensation to procure a bond is not a proper charge against the estate.
The
giving of a bond is in the nature of a qualification for the office, and not necessary
in
the settlement of the estate. The position of an executor or administrator is one of
trust. It is proper for the law to safeguard the estates of deceased persons by
requiring the executor or administrator to give a suitable bond.
One liner: The premiums paid on the bond filed by the administrator cannot be
included as an expense of administration since the giving of a bond is in the nature
of
a qualification for the office, and not necessary in the settlement of the estate.
3) CIR vs CA 123206
Administration expenses, as an allowable deduction from the gross estate of the
decedent for purposes of arriving at the value of the net estate, have been construed
to include all EXPENSES "essential to the collection of the assets, payment of
debts or the distribution of the property to the persons entitled to it." In
other words, the expenses must be essential to the PROPER SETTLEMENT of the
estate. Expenditures incurred for the INDIVIDUAL benefit of the heirs, devisees or
legatees are not deductible.
Coming to the case at bar, the notarial fee paid for the extrajudicial settlement is
clearly a deductible expense since such settlement effected a distribution of Pedro
Pajonar's estate to his lawful heirs. Similarly, the attorney's fees paid to PNB for
acting
as the guardian of Pedro Pajonar's property during his lifetime should also be
considered as a deductible administration expense. PNB provided a detailed
accounting
of decedent's property and gave advice as to the proper settlement of the latter's
estate, acts which contributed towards the collection of decedent's assets and the
subsequent settlement of the estate.
4) DIZON vs CIR
The appropriate deduction is the "value" that the claim had at the date of the
decedent's death. Also, as held in Propstra v. U.S., where a lien claimed against the
estate was certain and enforceable on the date of the decedent's death, the fact that
the claimant subsequently settled for LESSER amount did NOT preclude the estate
from deducting the ENTIRE amount of the claim for estate tax purposes. That
postdeath
developments are not material in determining the amount of the deduction.
We express our agreement with the date-of-death valuation rule
1. First. There is no law which disregards the date-of-death valuation principle and
particularly provides that post-death developments must be considered in
determining the net value of the estate. It bears emphasis that tax burdens are
not to be imposed, nor presumed to be imposed, beyond what the statute
expressly and clearly imports, tax statutes being construed strictissimi
juris against the government. Any doubt on whether a person, article or activity
is taxable is generally resolved against taxation.
2. Second.Such construction finds relevance and consistency in our Rules on
Special
Proceedings wherein the term "claims" required to be presented against a
decedent's estate is generally construed to mean debts or demands of a
pecuniary nature which could have been enforced against the deceased in his
lifetime, or liability contracted by the deceased before his death.
One liner: The claims existing at the time of death are significant to, and should be
made the basis of, the determination of allowable deductions.
5. ABELLO vs CIR
Donation has the following elements: (a) the reduction of the patrimony of the donor;
(b) the increase in the patrimony of the donee; and, (c) the intent to do an act of
liberality or animus donandi.
that donative intent is not negated by the presence of other intentions, motives or
purposes which do not contradict donative intent. In fine, the purpose for which the
sums of money were given, which was to fund the campaign of Senator Angara in
his
bid for a senatorial seat, cannot be considered as a material consideration so as to
negate a donation.
That political/electoral contributions, duly reported to the Commission on Elections,
are
not subject to the payment of any gift tax. This all the more shows that the political
contributions herein made are subject to the payment of gift taxes, since the same
were made prior to the exempting legislation, and Republic Act No. 7166
(November
25, 1991) provides no retroactive effect on this point.
One liner: Political/electoral contributions duly reported to the Commission on
Elections are not subject to the payment of any gift/donor tax.