Professional Documents
Culture Documents
Estate tax is a tax on the right of the deceased person to transmit his
estate to his lawful heirs and beneficiaries. It is not a tax on property. Estate
tax is held to be an excise tax imposed on the privilege of transmitting
property upon the death of the owner. The estate tax is generated by the
death and accrues at the time of death. It is governed by the law in force at
the time of death notwithstanding the postponement of the actual possession
or enjoyment of the estate by the beneficiary.
Tax rates prescribed under RA 8424 apply to estate taxes falling due or
have accrued beginning January 1, 1998, the effectivity of the said law
otherwise known as “The Law Reform Act of 1997”
Aside from the reason that transfer taxes provide income to the
government, there are other justifications for their imposition. First is the
benefit – received theory that recognizes the role of the State in the
distribution of the estate of a decedent to the heirs whether it is in accordance
with the decedent’s will or by operation of law. Next is the privilege theory.
Inheritance is a privilege granted by the State. Estate acquired and
accumulated is under the State’s protection. The next theory is the ability to
pay theory that asserts that the heirs because of the inheritance they received
are able and capable to pay the taxes due the State. Last is the redistribution
of wealth theory that reduces the property received by the heirs through
taxes.
Takes effect upon the death of the donor. Its characteristics are:
REVOCABLE TRANSFER
The rule is the gross estate shall include any property passing or
transferred under general power of appointment exercised by the decedent
a. By will
b. By deed to take effect in possession or enjoyment at or after his death
c. By deed under which he has retained for his life or any period not
ascertainable without reference to his death or for any period which
does not in fact end before his death
d. The possession or enjoyment of, or the right to the income from the
property
e. The right either alone, or in conjunction with any person to designate
the persons who shall possess or enjoy the property or the income
therefrom
Proceeds of life insurance under policies taken out by the decedent upon
his own life shall be included in his gross estate in the following cases:
I. PROBLEMS
1. Adequacy of Consideration for Transfer
For each case, determine the value to include in the gross estate
computation:
Cases
A B C
Consideration received by transferor decedent at the 1000, 000 500, 000 0
time of transfer
Fair market value at the time of transfer 1000, 000 1000, 000 1000, 000
Fair market value at the time of death of transferor 1250, 000 1250, 000 1250, 000
Cases
A B C
Fair market value at the time of death of transferor 900, 000 900, 000 900, 000
Fair market value at the time of transfer 800, 000 800, 000 800, 000
Determine the situs of each property and for each type of decedent, be able to
compute the gross estate of Mr. To if he left the following property:
a.
b. Resident citizen
c. Non – resident citizen
d. Resident Alien
e. Non – resident alien, with reciprocity
f. Non – resident alien without reciprocity
Value
1. Bank deposit at China Bank, Ayala Ave., IN 2500, 000
Makati City
2. House & lot in Thailand OUT 1500, 000
3. Building & land on which it stands in Pasay IN 5000, 000
City
4. Trees, plants, growing fruits & land on w/h IN 250, 000
they are planted in Baguio City
5. Car in the Philippines IN 350, 000
6. Appliances in house & lot in the Philippines IN 100, 000
7. Appliances in house & lot in Thailand OUT 200, 000
8. Jewelry in the Philippines IN 600, 000
9. Jewelry in Thailand OUT 250, 000
10. Bank deposited in Zurich, Switzerland OUT 7500, 000
11. House & lot in the Philippines IN 1250, 000
12. Interest in an industry established in OUT 1000, 000
Brisbane, Australia
13. Notes receivable, debtor residing in IN 75,000
Philippines
14. Accounts receivable, debtor residing in OUT 87,500
Switzerland
15. Fish Pond in Laguna IN 100, 000
16. Copyright exercised in the Philippines IN 150, 000
17. Van in Malaysia OUT 400, 000
18. Trademark used in Malaysia OUT 200, 000
19. Obligations issued by foreign corporation with OUT 375, 000
no business situs in the Philippines
20. Franchise used in the Philippines IN 350, 000
21. Shell Corporation certificate of stocks kept in IN 225, 000
safe in Thailand
22. Globe Telecom certificates of stocks kept in IN 275, 000
the Philippines
23. Treasury bonds issued by Bangko Sentral ng IN 425, 000
Pilipinas
24. Patent exercised in China OUT 300, 000
25. Foreign shares, 80% of the business is in the OUT 450, 000
Philippines
26. Foreign bonds with business situs in the IN 325, 000
Philippines
27. Business right in corporation established in OUT 750, 000
Macau, China
28. Investment in a partnership established in the IN 1125, 000
Philippines
29. Foreign shares, 90% of the business is in the IN 875, 000
Philippines
a. resident citizen
Value
1. Bank deposit at China Bank, Ayala Ave., Makati City 2500, 000
2. House & lot in Thailand 1500, 000
3. Building & land on which it stands in Pasay City 5000, 000
4. Trees, plants, growing fruits & land on w/h they are 250, 000
planted in Baguio City
5. Car in the Philippines 350, 000
6. Appliances in house & lot in the Philippines 100, 000
7. Appliances in house & lot in Thailand 200, 000
8. Jewelry in the Philippines 600, 000
9. Jewelry in Thailand 250, 000
10. Bank deposited in Zurich, Switzerland 7500, 000
11. House & lot in the Philippines 1250, 000
12. Interest in an industry established in Brisbane, Australia 1000, 000
13. Notes receivable, debtor residing in Philippines 75,000
14. Accounts receivable, debtor residing in Switzerland 87,500
15. Fish Pond in Laguna 100, 000
16. Copyright exercised in the Philippines 150, 000
17. Van in Malaysia 400, 000
18. Trademark used in Malaysia 200, 000
19. Obligations issued by foreign corporation with no 375, 000
business situs in the Philippines
20. Franchise used in the Philippines 350, 000
21. Shell Corporation certificate of stocks kept in safe in 225, 000
Thailand
22. Globe Telecom certificates of stocks kept in the 275, 000
Philippines
23. Treasury bonds issued by Bangko Sentral ng Pilipinas 425, 000
24. Patent exercised in China 300, 000
25. Foreign shares, 80% of the business is in the 450, 000
Philippines
26. Foreign bonds with business situs in the Philippines 325, 000
27. Business right in corporation established in Macau, 750, 000
China
28. Investment in a partnership established in the 1125, 000
Philippines
29. Foreign shares, 90% of the business is in the 875, 000
Philippines
TOTAL
26997500
Value
1. Bank deposit at China Bank, Ayala Ave., Makati City 2500, 000
2. House & lot in Thailand 1500, 000
3. Building & land on which it stands in Pasay City 5000, 000
4. Trees, plants, growing fruits & land on w/h they are 250, 000
planted in Baguio City
5. Car in the Philippines 350, 000
6. Appliances in house & lot in the Philippines 100, 000
7. Appliances in house & lot in Thailand 200, 000
8. Jewelry in the Philippines 600, 000
9. Jewelry in Thailand 250, 000
10. Bank deposited in Zurich, Switzerland 7500, 000
11. House & lot in the Philippines 1250, 000
12. Interest in an industry established in Brisbane, Australia 1000, 000
13. Notes receivable, debtor residing in Philippines 75,000
14. Accounts receivable, debtor residing in Switzerland 87,500
15. Fish Pond in Laguna 100, 000
16. Copyright exercised in the Philippines 150, 000
17. Van in Malaysia 400, 000
18. Trademark used in Malaysia 200, 000
19. Obligations issued by foreign corporation with no 375, 000
business situs in the Philippines
20. Franchise used in the Philippines 350, 000
21. Shell Corporation certificate of stocks kept in safe in 225, 000
Thailand
22. Globe Telecom certificates of stocks kept in the 275, 000
Philippines
23. Treasury bonds issued by Bangko Sentral ng Pilipinas 425, 000
24. Patent exercised in China 300, 000
25. Foreign shares, 80% of the business is in the 450, 000
Philippines
26. Foreign bonds with business situs in the Philippines 325, 000
27. Business right in corporation established in Macau, 750, 000
China
28. Investment in a partnership established in the 1125, 000
Philippines
29. Foreign shares, 90% of the business is in the 875, 000
Philippines
TOTAL 26997500
a. resident alien
Value
1. Bank deposit at China Bank, Ayala Ave., Makati City 2500, 000
2. House & lot in Thailand 1500, 000
3. Building & land on which it stands in Pasay City 5000, 000
4. Trees, plants, growing fruits & land on w/h they are 250, 000
planted in Baguio City
5. Car in the Philippines 350, 000
6. Appliances in house & lot in the Philippines 100, 000
7. Appliances in house & lot in Thailand 200, 000
8. Jewelry in the Philippines 600, 000
9. Jewelry in Thailand 250, 000
10. Bank deposited in Zurich, Switzerland 7500, 000
11. House & lot in the Philippines 1250, 000
12. Interest in an industry established in Brisbane, Australia 1000, 000
13. Notes receivable, debtor residing in Philippines 75,000
14. Accounts receivable, debtor residing in Switzerland 87,500
15. Fish Pond in Laguna 100, 000
16. Copyright exercised in the Philippines 150, 000
17. Van in Malaysia 400, 000
18. Trademark used in Malaysia 200, 000
19. Obligations issued by foreign corporation with no 375, 000
business situs in the Philippines
20. Franchise used in the Philippines 350, 000
21. Shell Corporation certificate of stocks kept in safe in 225, 000
Thailand
22. Globe Telecom certificates of stocks kept in the 275, 000
Philippines
23. Treasury bonds issued by Bangko Sentral ng Pilipinas 425, 000
24. Patent exercised in China 300, 000
25. Foreign shares, 80% of the business is in the 450, 000
Philippines
26. Foreign bonds with business situs in the Philippines 325, 000
27. Business right in corporation established in Macau, 750, 000
China
28. Investment in a partnership established in the 1125, 000
Philippines
29. Foreign shares, 90% of the business is in the 875, 000
Philippines
TOTAL 26997500
a. non – resident alien, with reciprocity
Value
1. Building & land on which it stands in Pasay City 5000, 000
2. Trees, plants, growing fruits & land on w/h they are 250, 000
planted in Baguio City
3. Car in the Philippines 350, 000
4. Appliances in house & lot in the Philippines 100, 000
5. Jewelry in the Philippines 600, 000
6. House & lot in the Philippines 1250, 000
7. Notes receivable, debtor residing in Philippines 75,000
8. Fish Pond in Laguna 100, 000
TOTAL 7650000
Value
1. Bank deposit at China Bank, Ayala Ave., Makati City 2500, 000
2. Building & land on which it stands in Pasay City 5000, 000
3. Trees, plants, growing fruits & land on w/h they are planted 250, 000
in Baguio City
4. Car in the Philippines 350, 000
5. Appliances in house & lot in the Philippines 100, 000
6. Jewelry in the Philippines 600, 000
7. House & lot in the Philippines 1250, 000
8. Notes receivable, debtor residing in Philippines 75,000
9. Fish Pond in Laguna 100, 000
10. Copyright exercised in the Philippines 150, 000
11. Franchise used in the Philippines 350, 000
12. Shell Corporation certificate of stocks kept in safe in 225, 000
Thailand
13. Globe Telecom certificates of stocks kept in the Philippines 275, 000
14. Treasury bonds issued by Bangko Sentral ng Pilipinas 425, 000
15. Foreign bonds with business situs in the Philippines 325, 000
16. Investment in a partnership established in the Philippines 1125, 000
17. Foreign shares, 90% of the business is in the Philippines 875, 000
TOTAL 13985000
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