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BUSINESSTAX_PROBS

The document presents two problems related to estate tax calculations for married and unmarried decedents. In the first case, Mario's net taxable estate is determined to be ₱2,250,000, resulting in an estate tax due of ₱135,000. In the second case, Baltazar's net taxable estate is calculated at ₱3,500,000, leading to an estate tax due of ₱210,000.

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226 views5 pages

BUSINESSTAX_PROBS

The document presents two problems related to estate tax calculations for married and unmarried decedents. In the first case, Mario's net taxable estate is determined to be ₱2,250,000, resulting in an estate tax due of ₱135,000. In the second case, Baltazar's net taxable estate is calculated at ₱3,500,000, leading to an estate tax due of ₱210,000.

Uploaded by

markjologaraci5
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PROBLEM 1- ESTATE TAX: GROSS ESTATE OF MARRIED DECEDENTS

Mario was married at the time of death and was survived by wife and their five legitimate children when
he was still alive. He died on November 1, 2021, leaving the following

Real and personal properties in the Philippines: P11,000,000

Proceeds of life insurance:

Receivable by the estate as a revocable beneficiary: 5,000,000

Receivable by third party as irrevocable beneficiary: 3,900,000

Medical expenses within one year prior to death:

Paid by the time of death: 500,000

Unpaid as at time of death: 400,000

Funeral expenses:

Paid by the time of death: 200,000

Unpaid at the time of death: 300,000

Other obligations of the decedent: 1,500,000

Requirement:

a. Determine the net taxable estate.

b. Determine the estate tax due.


SOLUTION

(a.)

Real and personal properties in the Philippines: P11,000,000

Receivable by the estate as a revocable beneficiary: 5,000,000

Gross Estate 16, 000,000

Total Allowable Deductions

Other obligations of the decedent: (1,500,000)

Community Estate 14, 500,000

Standard Deduction: (5,000,000)

Share of the Surviving Spouse

(14,500,000 ÷2) (7,250,000)

NET TAXABLE ESTATE 2, 250, 000

(b)

Net Taxable estate 2,250,000

Estate Tax Rate x 6%

ESTATE TAX DUE 135,000

SUMMARY AND DISCUSSION

 The Gross Estate consists of the decedent’s real and personal properties in the Philippines
amounting to ₱11,000,000, plus proceeds from life insurance where the estate is the revocable
beneficiary, adding ₱5,000,000, giving a total of ₱16,000,000.
 Allowable deductions include the decedent’s other obligations totaling ₱1,500,000, reducing the
community estate to ₱14,500,000.
 Under the TRAIN Law, a standard deduction of ₱5,000,000 is applied, reducing the estate
further.
 Since the decedent was married, the remaining estate is divided equally between the decedent
and the surviving spouse, giving the spouse a share of ₱7,250,000.
 The net taxable estate after all deductions is ₱2,250,000.
 Applying the estate tax rate of 6%, the estate tax due is ₱135,000.

PROBLEM 2 - ESTATE TAX: GROSS ESTATE OF UNMARRIED DECEDENTS

Baltazar, an unmarried Filipino, died leaving the following to his mother who lived with him prior to his
death:

Family home 12,000,000

Other properties 8,000,000

Deductions being claimed:

Funeral expenses 300,000

Judicial expenses 600,000

Unpaid medical expenses 600,000

Other claims against the estate 1,500,000

Requirement:

a. Determine the net taxable estate.

b. Determine the estate tax.

SOLUTION

(a.)
Family Home ₱12,000,000

Other Properties ₱8,000,000

Total Gross Estate ₱20,000,000

Standard Deduction (5,000,000)

Family Home Deduction (1,000,000)

Other Claims against the estate (1,500,000)

NET TAXABLE ESTATE 3,500, 000

(b.)

Net Taxable estate 3,500,000

Estate Tax Rate x 6%

ESTATE TAX DUE 210,000

SUMMARY AND DISCUSSION

 The gross estate consists of a family home worth ₱12,000,000 and other properties worth
₱8,000,000, giving a total of ₱20,000,000.
 The standard deduction of ₱5,000,000 is subtracted as allowed under the TRAIN Law.
 The family home deduction is ₱1,000,000, based on the allowable deduction rules.
 Other claims against the estate amounting to ₱1,500,000 are also deducted.
 After deducting all allowable expenses, the net taxable estate is ₱3,500,000.
 The estate tax rate is 6%, which is applied to the net taxable estate.
 The final estate tax due is ₱210,000.

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