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Module 4 Estate Taxation 2

The document discusses estate taxation in the Philippines. It defines the gross estate as the total value of all property owned by the decedent at the time of death, whether real or personal, tangible or intangible, and wherever located. It provides details on what types of properties are included or excluded from the gross estate based on the citizenship and residency of the decedent. The valuation and inclusion of different asset types like real property, stocks, personal property, and claims are also explained. Finally, exclusions from the gross estate are listed.

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Melanie Samsona
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169 views4 pages

Module 4 Estate Taxation 2

The document discusses estate taxation in the Philippines. It defines the gross estate as the total value of all property owned by the decedent at the time of death, whether real or personal, tangible or intangible, and wherever located. It provides details on what types of properties are included or excluded from the gross estate based on the citizenship and residency of the decedent. The valuation and inclusion of different asset types like real property, stocks, personal property, and claims are also explained. Finally, exclusions from the gross estate are listed.

Uploaded by

Melanie Samsona
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY

COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY


DEPARTMENT OF ACCOUNTANCY

ACT184: Business Taxes


Estate Taxation (2)

ABSTRACTION

GROSS ESTATE
Consists of the totality of the value of all property of the decedent at the time of his death,
whether real or personal, tangible or intangible, wherever situated. The items to be included and
excluded in the gross estate depend upon the citizenship and/or residence of the decedent.

TANGIBLE INTANGIBLE
PERSONAL PERSONAL
DECEDENT REAL PROPERTY PROPERTY PROPERTY
  within without within without within without
Citizen Included Included Included Included Included Included

Resident Alien Included Included Included Included Included Included


Included
(Note:
Excluded
if there is
Non-Resident reciprocity
Alien Included Excluded Included Excluded ) Excluded

Note: Amounts withdrawn from the deposit accounts of a decedent subjected to the 6% final
withholding imposed under Sec. 97 of the NIRC, shall be excluded from the gross estate for
purposes of computing the estate tax.

Intangible personal property means incorporeal property which do not have physical form but
represents rights and privileges.

INTAGIBLE ASSET SITUS


Receivable (promissory note_ Residence of the debtor
Bank deposits Location of the bank
Other intangible properties: Where the property is used or exercised
a. Franchises
b. Investment in partnership Where the partnership is established
c. Shares of stocks (including corporate
bonds)
i. Domestic Corporation Within
ii. Foreign Corporation Without
EXCEPT:
1. If greater than of equal to 85% Within
of business is in the Philippines.
2. If shares have acquired a
business situs in the Philippines

1
MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY

Properties to be Included in the Gross Estate of the Decedent


1. Properties owned by the decedent and physically present in his estate at the time of
death.
2. Interest (whether legal or beneficial) in property owned or possessed by the decedent at
the time of death. (Ex: Usufructuary Rights)
3. Taxable Transfers – made during lifetime, but are in nature of testamentary dispositions
(mortis causa in substance). The decedent remains in control of the property, and the
transfer is intended to take effect at or after his death,
a. Transfer in contemplation of death
b. Revocable transfers
c. Property passing under a general power of appointment
d. Transfer with retention or reservation of certain rights over the income or
enjoyment of the property transferred
e. Transfer for insufficient consideration.
f. Proceeds of life insurance
4. Claims against insolvent person
5. Conjugal/Community Properties, if the decedent was married

PROPERTIES OF SPOUSES
The extent of the gross estate of the decedent shall depend upon the property relations
between the decedent and his/her spouse.

Property Regimes:
a. Absolute Community of Properties (ACP)
b. Conjugal Partnership of Gains (CPG)
c. Separation of Property

Property Classification
PROPERTY CPG ACP
Properties acquired BEFORE marriage EXCLUSIVE COMMUNAL, except
if there is prior
descendant
Properties acquired DURING marriage:
a. Gratuitous EXCLUSIVE EXCLUSIVE
b. Onerous CONJUGAL COMMUNAL
c. Exchange of Existing
Exclusive Property EXCLUSIVE EXCLUSIVE
Conjugal/Communal CONJUGAL COMMUNAL

Fruits, Income and Gain


a. From labor, practice of profession and CONJUGAL COMMUNAL
business
b. From exchange/sale of property
Exclusive Property CONJUGAL EXCLUSIVE
Conjugal/Communal CONJUGAL COMMUNAL

Personal Property for exclusive use EXCLUSIVE EXCLUSIVE, except


jewelries

2
MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY

EXCLUSIONS FROM GROSS ESTATE


1. Merger of the Usufruct in the owner of the naked title
2. Fideicommissary substitution
3. The transmission from the first heir, legatee, or donee in favor of another beneficiary, in
accordance with the desire of the predecessor
4. All bequest, devises, legacies or transfer to social welfare, cultural and charitable
institutions no part of the net income which inures to the benefit of any individual;
provided, that no more than 30% of the said bequest, legacies or transfers shall be used
by such institutions for administration purposes.
5. Excluded proceeds of the life insurance from the gross estate
a. Benefits from GSIS and SSS by reason of death
b. Benefits from Philippines and US government for war damages
c. Benefits from US Veteran Administration
d. Retirement benefits of officials/employees of private firms
e. Life insurance proceeds on insurance policy upon his own life, where the
beneficiary is a third person, and the designation is irrevocable.
f. Life insurance proceeds on insurance policy (group policy) taken out by the
employer on the employees’ life regardless of who is the beneficiary and the
designation.

VALUATION OF GROSS ESTATE


PROPERTY VALUATION
1. Real Property FMV
a. As determined by the Commissioner
or
b. As shown in the schedule of values
fixed by the provincial and city
assessors
WHICHEVER IS HIGHER
2. Shares of Stocks
UNLISTED:
Common Shares Book Value, appraisal surplus shall not be
considered as well as the value assigned to
preferred shares

Preferred Shares Par Value

LISTED Arithmetic Mean between the highest and the


lowest quotation at a date nearest the date of
death, if none is available on the date of
death

3. Personal Property Whether tangible or intangible, appraised at


Fair Market Value. Sentimental value is
disregarded.

4. Notes; Accounts Receivable FMV is the discounted amount of the unpaid

3
MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY

principal plus interest

- END-

REFERENCES
Tabag, E. D. (2019). Transfer and Business Taxation. Manila: Info Page.

Valencia, E. G. (2017). Transfer and Business Taxation. Baguio City: Valencia Educational Supply.

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